#1Nuuday Annual Report 2022 lo nuuday#2nuuday Contents In brief Nuuday at a glance Letter from CEO Key highlights of 2022 In brief Business and strategy Performance Corporate governance Financial statements 4 358 a 9 Financial overview Business and strategy Our business model 11 11 10 Delivering on our strategy 13 Performance 17 Nuuday's performance 18 Corporate governance Corporate governance statement Risk management Sustainability highlights Board of Directors Executive Management 20 20 21 31 WANNN 22 29 33 Financial statements 35 36 Parent company financial statement 81 Management statement and independent auditor's report 99 Business and strategy page 10 make sense technology Letter from the CEO page 5 Shortcut to reading the annual report Click on the tabs in the menu to navigate quickly to the tables of contents for the report and accounts, respectively. Nuuday Annual Report 2022 2#3nuuday In brief ....... Business and strategy Performance Corporate governance Financial statements In brief the Essentials Nuuday at a glance Letter from the CEO Key highlights of 2022 Financial overview 8 Nuuday Annual Report 2022 3#4nuuday In brief Business and strategy Performance Corporate governance Financial statements Nuuday at a glance Nuuday is Denmark's leading telecoms service provider consisting of eight consumer and business brands spanning connectivity, communication and entertainment - all with the shared goal of helping customers make sense with technology. nuuday 5.8m Our customer relations LL | | || 1.8m Customer relations (RGUS) at Nuuday Business, incl. mobile partners Our brands * Underlying EBITDA/ CAPEX, excl. transformation costs อ.ด TO 3,515 Employees excl. transformation FTEs Revenue (DKKbn) EBITDA* (DKKbn) 14.7 1.8 1.1 4.1m Consumer CAPEX⭑ (DKKbn) youSee BLOCKBUSTER® TELMORE HIPER eesy Bare mobil ||||| Net Design Relatel TDC Erhverv Nuuday Annual Report 2022 4#5nuuday In brief Business and strategy Performance Corporate governance Financial statements ....... Letter from the CEO Delivering the new Nuuday e make sen technolo The Nuuday team looks back on 2022 with substantial pride as a year when we rapidly accelerated our transformation. On arriving in June 2021, I set out the ambition to fundamentally transform Nuuday into a best-in-class telco on a par with key European peers. Specifi- cally, we want to be the preferred pro- vider for Danish consumers and busi- nesses, delivering the best customer experiences and in the most digital way. In 2022, we took the first major steps to deliver on that promise, as we laid the foundations for the new Nuuday. Technology - a new modern IT stack We have begun replacing our legacy technology systems, some of which are up to 40 years old and no longer suitable for the modern telco market. Not only have they contributed to an excessive cost base, but they have also inhibited our ability to design the very best cus- tomer experiences and shift our interac- tions with our customers to the digital world. After a rigorous RFP process, in June we signed a contract with Netcracker to replace our complex legacy systems with a new modern IT stack. Our strategy is radical; to replace our entire BSS and OSS stacks with a 'best of suite' (i.e. an end-to-end) 'greenfield' cloud-based IT stack. Given the age of our existing sys- tems, we rejected the more typical telco IT transformation - 'best of breed' which replaces certain components and had been tried multiple times at TDC without success. - Our chosen approach will accelerate implementation, provide easy access to product development shared with major telcos worldwide, and radically lower costs inside and outside IT while consid- erably enhancing the stability and secu- rity of our technology. Together with Netcracker, we have made excellent progress. We will launch in H2 2023 with our consumer business, and we have already successfully com- pleted the key work for phase 1 in accordance with our timelines by the end of 2022. This includes simplifying our product portfolio and completing the blueprinting and design phases. Improving our customer experience In advance of the new technology plat- form, we have made very significant progress in transforming the Nuuday Annual Report 2022 5#6nuuday Letter from the CEO In brief Business and strategy Performance Corporate governance Financial statements ....... performance of the Nuuday business - both concerning sales but critically also in raising the quality of our customer experience, which is central to the prom- ise we made after my arrival in mid-2021. Material improvements in our customer experience followed in 2022, thanks to a wide-ranging programme of improve- ments across our processes, online resources, customer journeys and work on stabilising and streamlining our legacy technology stack. For example: • • The overall volume of customer calls to YouSee fell by 11% in 2022, once again reflecting improvements in the design of our customer journeys. Introducing the Genesys call handling or CXM platform during 2022 across our key businesses led to a material improvement in our ability to handle call traffic efficiently, in line with cus- tomer expectations. - - • We dramatically improved the preci- sion of fibre delivery - the percentage of customers who received their fibre installation on the date originally promised from a 'worst in class' 20% - at the beginning of 2022 to a respect- able 70% by the end of the year. In parallel, we also halved our average delivery time thanks to improved cooperation with our network opera- tor partners. • Overall, our brand Net Promoter Score (bNPS) improved across all the Nuuday brands by 6 points during the year, in- cluding a rise of more than 15 points for YouSee our leading consumer brand. Meanwhile, we have been investing steadily to improve the quality and value propositions offered by our product portfolio to match the best that Euro- pean telco peers can offer. YouSee launched YouSee Play - our new TV & streaming offering that allows cus- tomers to combine traditional flow TV channels with streaming services at af- fordable price points - and, for the first time, customers can opt not to have a set-top box. We have been pleased by the consumer response to YouSee Play, which has helped generate a sales uplift of 40%, and by the positive reaction of housing associations to the product. This integration of streaming allowed us to merge YouTV - our previous OTT TV of- fering into YouSee's overall entertain- ment proposition at the end of 2022. - TDC Erhverv also invested significantly in reshaping its proposition, by improving and repositioning its offerings for the SMB segment during Q3. We also in- vested materially to strengthen our security solutions, including our 24/7 Security Operations Center, which has resulted in a significant influx of new customers who prioritise security - especially given the higher risks facing Danish public and private organisations from early 2022 onwards. Accelerating our business transformation programme In 2022, we saw a shift in pace and direc- tion from the business, as we aim to upgrade from a 'legacy' telecoms pro- vider with poor systems and customer experiences into a 'best in class' digital service provider on a par with the best in Europe. None of this would be possible without high levels of motivation and enthusiasm for the change among our colleagues. This is an area we have invested in heav- ily, and I am delighted with the extent to which our Nuuday colleagues have em- braced both the need for the transfor- mation and our strategy for delivering it. As a result, we saw significant gains in job satisfaction over 2022, with our internal eNPS and eSAT scores jumping 7 points and 2 points, respectively - Nuuday now outperforms the average achieved by larger Danish businesses and is on a par with the highest performers in key cate- gories. Excitement about being part of the largest transformation in Danish tel- ecoms history is a key motivator for the wider business as it is for me and my management team. This enthusiasm is also reflected in the efforts we have made to support a gen- uine transformation among our people. As part of accelerating the shift from a legacy to a digital challenger mindset, we have developed an important and chal- lenging training programme to enhance the 'cognitive diversity' of our population and embrace approaches that differ from those they might have chosen his- torically. This has been an important ele- ment of our successful transformation during 2022. We also continued to make steady pro- gress with our sustainability agenda. Our strategy includes a focus on online edu- cation for children and improving the sustainability of our product offerings, while ensuring we secure our Ecovadis platinum rating - among the global top 1% of companies for corporate sustaina- bility performance. Our work on transforming our products, customer experience, technology and work practices is steadily improving our financial performance and is central for our long-term financial ambitions. In 2022, Nuuday performed in line with its financial guidance. Service revenue grew slightly by 0.5% YoY, as growth in mobile services and high-speed broad- band, driven by both customer growth and price adjustments, offset the decline in legacy services such as PSTN and TV. Gross profit declined by 2.9% YoY, to DKK 4.847bn, due to increasing energy prices, increasing costs from switching to fibre, and increasing third-party content costs. With Nuuday entering the next stages of its transformation programme, we be- gan reporting transformation costs sep- arately from Q2. For the full year, un- derlying EBITDA (excl. transformation Nuuday Annual Report 2022 6#7nuuday Letter from the CEO In brief Business and strategy Performance Corporate governance Financial statements ....... costs) dropped by 3.1% but we experi- enced a positive trend through the year as our customer base stabilised and we began to realise efficiency gains; Q4 EBITDA grew by 14.3% compared with EBITDA in Q4 2021. From a broader perspective, we collabo- rated with network operators and regulators to ensure that the Danish telecoms landscape, particularly in fixed services, operates with consumers' interests in mind. The evolution of the Danish market has created a patchwork of multiple infra- structure operators, in many cases effective monopolies, but with a light touch approach to regulation of quality, and multiple different technical approaches. Particularly in a market of Denmark's scale, this causes undue complexity, higher costs and weaker incentives to innovate, which ultimately impacts Danish consumers and busi- nesses. We are working to encourage a shift to a more 'European' model that allows service providers such as Nuuday to create low-cost, standard offerings across Denmark while also incentivising innovation notably in the B2B market. - 2023 outlook 2023 will be a crucial year for Nuuday's transformation as we launch our con- sumer business on the Netcracker plat- form, starting with our mobile business in Q3 2023. Together with our highly dedi- cated and talented employees, I enter 2023 full of confidence that we will main- tain our strong transformation pace from 2022 and will take important steps in 2023 towards delivering the new Nuuday. म्छ Jon James CEO of Nuuday 1 Transformation costs exclusively comprise costs that will cease on completion of the transformation, and that are directly related to Nuuday's comprehensive business transformation, e.g. direct IT costs, external expenses and personnel costs for resources working on the transformation, as well as extra costs from running parallel systems during the transformation. Transfor- mation costs are fully funded, i.e. costs related to Nuuday's transformation are covered by Nuuday's current cash balance. Nuuday Annual Report 2022 7#8nuuday In brief Business and strategy Performance Corporate governance Financial statements Key highlights of 2022 Disney+ Strengthened entertainment universe We added SkyShowtime, Disney+ and more streaming services to Telmore Play and YouSee, making us the only provider of all streaming channels under one roof Live on all major utility networks YouSee, TDC Erhverv and Hiper continued to launch broadband and TV offerings on new utility fibre networks, notably the Energi Fyn, Fibia and Thy-Mors fibre networks. Nuuday now has a truly nationwide fibre footprint N Netcracker Partnered with Netcracker to build new IT stack We signed a contract with Netcracker to replace our complex legacy systems with a new modern IT stack and to become a best-in-class digital service provider TDC Erhverv YouSee Play Repositioned TDC Erhverv in the SMB segment TDC Erhverv repositioned itself in the SMB market with integrated telecommunications and IT security solutions featuring increased convenience and cybercrime prevention Successfully launched YouSee Play YouSee launched YouSee Play as our new TV & streaming service offering customers maximum flexibility and choice at attractive price levels 2022 وا 5G SPEED 2023 HIPER Relief and support for refugees Nuuday offered free telephony to and from Ukraine as well as making multiple donations. YouSee also spearheaded an initiative to donate 20,000 free SIM cards to Ukrainian refugees arriving in Denmark New CFO - completes Nuuday's leadership team Henrik Christiansen joined Nuuday as new CFO on 1 August, completing the leadership team that will execute on Nuuday's transformation. In parallel, eesy and Relatel appointed new CEOs Growth in mobile & high-speed broadband - key strategic areas Nuuday significantly outperformed previous years, with a mobile subscriber base that grew each quarter, and consumer broadband returning to growth in Q4 for the first time since Q1 2016 Best network for the 7th consecutive year Nuuday's mobile voice customers have access to Denmark's best network for the 7th consecutive year - now with 5G access for customers with eesy and TDC Erhverv one+ Key milestone passed ahead of time At the turn of 2022/2023, Hiper passed a key milestone six months ahead of time and now provides a best-in-class network and service for more than 100,000 Danish households Nuuday Annual Report 2022 8#9nuuday In brief Business and strategy Performance Corporate governance Financial statements ....... Financial overview 2022 2021 2020 2019 2022 2021 2020 2019 Income statement (DKKM)1 Key financial ratios (%) Revenue Hereof service revenue Gross profit Underlying EBITDA2 EBITDA 14,674 14,657 14,756 15,625 Service revenue growth 13,275 13,213 13,341 14,227 Gross margin 4,847 4,993 5,318 5,895 EBITDA margin 1,766 1,823 1,936 2,035 EBIT margin 1,709 1,823 1,936 2,035 Equity ratio 0.5 (1.0) (6.2) (1.1) 33.0 34.1 36.0 37.7 11.6 12.4 13.1 13.0 0.6 (0.1) (0.5) 1.0 37.5 2.2 4.4 6.2 Operating profit/(loss) (EBIT) 93 (13) (77) 164 Profit/(loss) before income taxes (227) (413) (470) (204) Retail RGUS ('000) Profit/(loss) for the year (190) (390) (410) (128) Mobile subscriptions³ 2,847 2,805 2,726 2,761 TV 949 985 1,037 1,177 Income statement, excluding special items Broadband4 1,036 1,049 1,091 1,170 Operating profit (EBIT) 159 111 46 219 Landline voice5 324 395 466 470 Profit/(loss) before income taxes: (161) (338) (347) (151) Profit/(loss) for the year (138) (342) (313) (87) Employees FTES (end-of-year) FTES Consumer Balance sheet (DKKm) Total assets 17,448 17,776 Net interest-bearing debt (NIBD) (2,827) (8,530) Total equity 6,543 Underlying capital expenditure2 (1,136) Capital expenditure (1,314) 386 (1,149) (1,149) 17,669 (9,647) 776 (1,431) (1,431) 19,101 (9,861) 1,192 (1,517) (1,517) FTES Business FTES Other Statement of cash flow (DKKm) Operating activities Investing activities Financing activities Total cash flow 959 (1,316) 755 2,146 (970) (1,174) 1,643 (1,348) (323) 1,322 (1,601) 298 398 2 (28) 19 3,615 3,686 3,985 4,515 1,939 2,033 2,197 2,552 964 971 1,056 1,193 712 682 732 770 1 Nuuday A/S was established on 7 December 2018. On 11 June 2019, the parent company TDC A/S demerged parts of its rights and obli- gations to Nuuday A/S. The financial statements reflect the demerger of TDC A/S, which had accounting effect from 1 January 2019. Prior to the demerger, Nuuday A/S had no activities, and the comparative figures for 2018 have not been restated. 2 Excluding transformation costs. 3 Comparative figures have been restated to include Nuuday-owned brand RGUS previously recognised as wholesale customers in Nuuday Mobile Partners and exclude Telmore debt collection customers. In addition, following the demerger of TDC A/S into Nuuday and TDC NET, comparative figures have been adjusted to include TDC NET employees in the RGUS that were previously excluded. 4 Comparative figures have been adjusted to include BTO fibre. 5 Following internal migration of customers and alignment of accounting methods in Q2 2020, the level of landline voice RGUS has in- creased. The migration had no impact on revenue or the result. Nuuday Annual Report 2022 9#10nuuday In brief Business and strategy Performance Corporate governance Financial statements Business and strategy Our business model Delivering on our strategy 11 13 Nuuday Annual Report 2022 10#11nuuday In brief Business and strategy Performance Corporate governance Financial statements Our business model Consumer brands TELMORE Mobile Denmark's third-largest consumer mobile brand, offer- ing a superior customer experience and uniquely mo- bile & streaming with Telmore Play HIPER Broadband Pure-play internet challenger delivering high-speed broadband with great value for money Nuuday is Denmark's leading telecoms provider, with a strong and diverse portfolio of brands and products. We are engaged in almost six million customer relations across consumer and business segments. Our brands provide Danish consumers and businesses with high-speed broadband and best-in-class mobile connectivity, flexible TV & streaming propositions, and a broad suite of advanced business solutions, including cybersecurity, unified communications and digital collaboration. youSee TV, mobile and broadband Denmark's leading triple play telecommunications and entertainment provider, with more than 1.5 million Danish households as customers BLOCKBUSTER® An OTT TVOD streaming service The preferred digital movie rental platform for movie lovers, with market-leading breadth and depth of choice. eesy Mobile Digital and fast-growing mobile brand providing easy, value-for-money mobile connectivity on Denmark's best network (On 7 March 2023, we announced that Blockbuster was beeing acquired by SF Anytime. The transfer of ownership will take place over a 6- month period ending 31 August 2023). #1 market position in DK across consumer broadband, TV, mobile voice, as well as B2B services 5.8m customer relations (RGUS) in total Business brands TDC Erhverv Mobile, broadband & network services as well as security, uni- fied communications & digital col- laborating and loT Denmark's market leader in B2B telecommunications with a broad portfolio of solutions |||||| Net Design An advanced network, unified communications & digital collaboration, and cyber security Leading provider of advanced integrated B2B solutions and security operation centre services Relatel Mobile, mobile broadband and innovative switch software A mobile B2B brand focused on providing SMBs with great prod- ucts and services at attractive prices Nuuday Annual Report 2022 11#12nuuday In brief Business and strategy Performance Corporate governance Financial statements We have Denmark's strongest range of partnerships to ensure our customers can access Denmark's best mobile and fixed networks, best-in-class entertainment and leading-edge business offers Denmark's best mobile network Leading high- speed broadband coverage Superior entertainment portfolio Best-in-class business solutions Our unique partnership with TDC NET gives us access to the best-in-class 5G mobile network, assessed as the best coverage and quality network for the 7th consecutive year Through our partnerships with the leading Danish fibre and cable networks, we provide access to high-speed broadband for the vast majority of Danish house- holds and businesses With the best and most relevant entertainment catalogue, and through strong partnerships with both domestic and interna- tional content providers, we offer our customers access to a world of entertainment from both streaming services as well as broadcasters Through well-established business partnerships with industry leaders such as Cisco and Microsoft, we of- fer our business customers flexible best-in-class solutions within areas such as cyber security, digital collaboration and unified communications Our network partner: tdc net Selection of our partners: tdc net EWii Fibia THY-MORS ENERGI Selection of partners: TP HBOMAX NETFLIX DISNEY+ Selection of partners: CISCO Partner Gold Microsoft Partner Nuuday Annual Report 2022 12#13nuuday In brief Business and strategy Performance Corporate governance Financial statements Delivering on our strategy Nuuday's clear ambition is to be a European best-in-class telco and the preferred service provider for Danish households and businesses. To reach this goal, Nuuday set out a new strategic direction in 2021 that is guiding Nuuday's far-reaching transformation. In 2022, Nuuday made substantial progress across all its three strategic pillars, demonstrating its ability to deliver tangible results on a well-defined strategy. Best choice The best choice for Danish consumers and businesses Across a strong brand portfolio with diverse value propositions, we aim to offer our customers the best choice, through all-encompassing, flexible, and innovative products based on leading-edge technologies Strategic focus areas Deliver best-in-market connectivity everywhere Innovate entertainment and business solutions Provide excellent value for converged house- holds and businesses Best experience Deliver the best customer experience We are determined to provide Danish consumers and businesses with seam- less journeys and meet them on their preferred channels - an aim shared by all our brands Strategic focus areas Systematically eliminate pain points Create smooth and seamless customer journeys Provide excellent value for converged house- holds and businesses Most digital Digital transformation through radical simplification By radically simplifying our business model and transforming our IT, we seek to innovate and continuously deliver the best products and services as well as the best digital experiences to our customers Strategic focus areas Simplify business model Transform IT foundation Digitalise our customer interactions Nuuday Annual Report 2022 13#14nuuday Best choice In brief Business and strategy Performance Corporate governance Financial statements 2022: Expanding our best-in-class range In 2022, we launched various initiatives supporting our aspiration to be the Best Choice for Danish consumers and businesses. We further expanded our high-speed broadband footprint by entering into new partnerships with utilities across the country. We further improved our 5G experience in collaboration with TDC NET, and once again re- ceived top external recognition from Teknologisk Institut for our ef- forts by winning Denmark's best mobile network award for the 7th consecutive year. Within entertainment, YouSee Play, a fully flexible entertainment service, went live, combining traditional TV channels with innovative streaming services. We also strengthened our con- tent by adding Disney+, SkyShowtime and Nordisk Film+ to the streaming selection universe at both YouSee and Telmore Play. Highlight initiatives YouSee Play To meet the increasing demand for flexible entertain- ment solutions, we launched YouSee Play, a new enter- tainment universe combining TV channels and streaming services, at attractive price levels - with no fixed, basic package requirement Hiper, our high-speed broadband challenger brand, was awarded "best value for money" by Loyalty Group for the 3rd consecutive year MEST VERDI FOR PENGENE VINDER 2022 We increased our focus on supporting small and medium- sized businesses, based on their day-to-day operating needs. For example, InternetFilter is now an integral part of TDC Erhverv's broadband portfolio, reflecting how security solu- tions are becoming even more crucial to businesses, irre- spective of industry and size At TDC Erhverv, we are determined to remain the Best Choice for Danish busi- nesses - also long term. In 2022, we con- tinued pushing innovation forward by initi- ating a new drone project in collaboration with Falck. Aiming to save lives through faster and more efficient transportation of blood samples and medicine, it is a prime example of how 5G technology can benefit everyone in the future - John Henriksen, Head of TDC Erhverv While expanding our collaboration with Fibia, we went live on Energi Fyn and Thy-Mors Energi utility fibre networks - and now offer high-speed fibre connec- tions to an additional 250,000 households, while deliv- ering across all major fibre networks THY-MORS ENERGI Energifyn Fibia Denmark's best mobile network For the 7th consecutive year, we were delighted to of- fer Denmark's best mobile network to our customers, creating unparalleled quality for our customers across 5G-coverage and speed dimensions Nuuday Annual Report 2022 14#15nuuday In brief Business and strategy Performance Corporate governance Financial statements Best experience 2022: Ongoing innovation brings tangible improvements During the year, we demonstrated tangible improvements across our key customer experience parameters. This progress resulted from various initiatives spanning from tools and processes to ways of working. For instance, by completely revamping its service organisa- tion, Hiper significantly reduced waiting times and improved its TNPS by 30 points. TDC Erhverv introduced a new online portal for end us- ers and further streamlined its customer communication, resulting in 43,000 fewer incoming calls. In terms of fibre delivery, better inter- nal processes at Nuuday combined with more efficient external col- laborations halved delivery times and raised precision rates from a less than satisfactory 20% to a decent 70%. New initiatives and improvements such as these helped improve Nuuday's overall bNPS by 6 points during 2022. Highlight initiatives * GENESYS Omni-channel support enables us to handle enquiries more ef- ficiently while delivering a better customer experience. In 2022, we successfully onboarded Genesys, a global leader in the CX platform space - a partnership that generated tangi- ble progress on our key service parameters and helped drive our NPS to the highest level in many years In 2022, eesy added MobilePay as a payment option, mirroring how customer preferences are becoming more seamless, and demonstrating how we constantly aim to improve every step of our customers' digital journeys. Building on an already leading platform, this helped sustain eesy's remarkable bNPS of 60+, a top ranking among its European peers We continue to deliver tangible progress on our ambition to deliver the best experiences across our products and services This year, we saw significant improvements in our tNPS scores reflecting how we strive to deliver great experiences in every customer interaction. In addition, strengthened collaboration with utility partners has enhanced our fibre journeys, and we also saw a drastic decline in incoming calls as a result of our data-driven efforts to systematically eliminate pain points - Michael Stinner, Head of CX & Transformation Hiper, eesy and Relatel, some of our digital chal- lenger brands, are all Trustpilot category leaders with impressive 4.6-4.7 scores - a testament to the digital-enabled efforts our frontline employees put into serving our customers every day Trustpilot FLEST VIL ANBEFALE VINDER 2022 We are delighted to be recognised for offering the best customer experience, which boosted our cus- tomer loyalty and recommendations. Our high-speed broadband brand, Hiper, was awarded the title of "Most recommended brand" by Loyalty Group with a higher Net Promoter Score than its peers Nuuday Annual Report 2022 15#16nuuday In brief Business and strategy Performance Corporate governance Financial statements Most digital 2022: Landmark partnership and successful project launch Our digital transformation embraces all our brands, departments and products, and we are constantly implementing value-adding digi- tal initiatives across these areas. Nonetheless, our IT transformation programme is the overarching IT project that will truly enable us to become a European best-in-class telco and the service provider pre- ferred by both Danish households and businesses. We are therefore thrilled to have entered a new partnership with Netcracker that equips us to utilise its state-of-the-art, cloud-native portfolio and professional services to replace our complex legacy systems with a new modern IT stack while we re-engineer our commercial and oper- ational processes. This truly transformative partnership will help us become a lean and digital service provider. We had already finalised our blueprinting phase just six months after launching the project and are now on track to deliver the new Nuuday! Highlight initiatives Our landmark strategic partnership with Netcracker, a global leader in Gartner's magic quadrant with a proven track record of successful transformative Telco projects, is the pivotal element of our transformation journey 000. N Netcracker We constantly seek to digitalise every customer interaction, and concrete initiatives in 2022 included creating online portals, implementing digital payment solutions and integrating trans- parency in our onboarding process. As a result, we received 11% fewer incoming calls and significantly increased our digital sales share 100 IT legacy systems are being replaced with an out-of- the-box solution as part of our digital transformation 40 years is the age of our oldest operating IT system, reflecting the massive potential for IT efficiency gains 29% of products have already been simplified as part of our product simplification campaign We are continuously digitalising all areas of our op- erations, and in 2022, implemented Adobe's leading marketing software solutions. We are pleased to see that our marketing ROI has already improved alongside better, tailored customer interactions A Adobe Nuuday's business transformation relies heavily on IT, and in 2022, we entered into a landmark strategic partnership with Net- cracker. Its proven track record of successful, on-time IT trans- formation programmes for leading European telcos based on out- of-the-box solutions inspired confidence during the selection pro- cess. Our joint efforts in the project organisation have clearly shown that we have embarked on a transformation journey with the ideal partner. We are on track - and we are positive that Nuuday will become the most digital telco in Denmark Monika Gullin, CTO Nuuday Annual Report 2022 16#17nuuday In brief Business and strategy Performance Corporate governance Financial statements Performance We Do Nuuday's performance 18 Nuuday Annual Report 2022 17#18nuuday In brief Business and strategy Performance Corporate governance Financial statements Nuuday's performance • • • . • In 2022, we stabilised or grew our key strategic areas, following several years of declining customer volumes. Mobile voice RGUS grew steadily each quarter, totalling net adds of 42,000 throughout 2022, while we successfully increased broadband RGUS in Q4 2022, for the first time in seven years. Revenue increased slightly by 0.1% with a 0.5% increase in service revenue, driven by strong performances in mobility services and high-speed broadband. Underlying EBITDA (excluding transformation costs¹) declined by 3.1%, driven mainly by gross profit margin pressure and increasing third-party costs against the background of stabilisation in our core business. Underlying capital expenditure dropped slightly by 1.1% but, when including transformation costs related to Nuuday's technology transformation, capital expenditure rose by 14.4%, as we began the significant investment in building the new Nuuday. Gross profit (DKKm) Revenue (DKKM) 14,674 Service revenue (DKKM) 13,275 4,847 3,081 Our financial performance reflects the phase we have reached in our transformation; we are clearly focused on investing in our customer experience and comprehensive business transformation. The benefits of our efforts are already visible in im- proved customer numbers, stable service revenue and improvements in operating expenditure in our underly- ing business. At the same time, we are investing materially to drive the business transformation; overall, we will invest more than DKK 1bn to complete our transformation. This will, over time, produce a sustainable, efficient and profita- ble business that delivers innovative products and ex- cellent customer experiences in a truly digital manner. Service revenue The company's success in stabilising its customer base was reflected in slightly growing service revenue, up 0.5% to DKK 13,275m. This rise in service revenue was driven by a continued strong performance in the mobile segment, offset by declines in legacy products and a modest decline in broadband - though with an increase in our high-speed broadband base. Service revenue in the mobile segment grew by 3.6%, driven by increasing ARPU at Telmore, and eesy's growing cus- tomer base, along with increased A2P SMS prices and international roaming activity at Mobile Partners. Gross profit Gross profit decreased by 2.9%, or DKK 146m, to DKK 4,847m. The decline was driven by costs related to customers migrating from legacy products (such as DSL) to future-proof high-speed products, increased energy costs and continued increase in third-party network and content costs. Underlying Opex (DKKm) Underlying EBITDA (DKKm) 1,766 1 From 2022, Nuuday began reporting transformation costs separately. from its underlying business performance. Transformation costs exclusively comprise costs that will cease on completion of the trans- formation, and that are directly related to Nuuday's comprehensive business transformation, e.g. direct IT costs, external expenses and personnel costs for resources working on the transformation as well as extra costs from running parallel systems during the transfor- mation. The costs of transformation are fully funded, i.e. the costs of Nuuday's transformation are covered by Nuuday's current cash balance. Nuuday Annual Report 2022 18#19nuuday In brief Business and strategy Performance Corporate governance Financial statements Operating expenses Nuuday's underlying operating expenses (excluding transformation costs) declined by 2.8%, or DKK 89m, to DKK 3,081m. This decrease reflected the early benefits of our transformation, notably the impact of improved customer experiences on reducing our call ratio. EBITDA Underlying EBITDA (excluding transformation costs) declined by 3.1%, or DKK 57m, to DKK 1,766m. Including transformation costs, EBITDA declined by 6.3%, or DKK 114m, to DKK 1,709m. Despite positive developments in service revenue, and falling operating expenses, EBITDA was negatively influenced by the decline in gross profit margins, primarily from third-party costs. Capital expenditure Capital expenditure excluding transformation costs decreased by 1.1%, or DKK 13m, to DKK 1,136m. This decline was driven mainly by lower capitalised wages as we re- duced investment in our legacy IT systems prior to the Netcracker launch. This was partly offset by an increase in volume-driven capex related to customer installations. Capital expenditure including transformation costs increased by 14.4%, or 165m, to DKK 1,314m. The increase was driven primarily by higher IT investments related to the transformation programme. Loss for the period After amortisation, interest expenses, etc., the loss (ex- cluding special items) amounted to DKK 138m. Despite transformation costs of DKK 57m in 2022, this was an im- provement of DKK 204m YoY. Including special items, the loss improved by DKK 200m to DKK 190m. The improved results were driven largely by reduced amortisation. Cash flow Total cash flow increased by DKK 396m from DKK 2m in 2021 to DKK 398m in 2022. The positive development was caused primarily by the transfer of Nuuday's share of TDC Holding's cash pool (DKK 865m) to its own bank accounts with effect from 1 January 2022. This was partly offset by the negative development in cash flow from investing activities (DKK 346m). Cash flow from operating activities declined by DKK 1,187m to DKK 959m, driven primarily by net working capital (DKK 1,225m) that related mainly to the imple- mentation of adjusted intra-group payment terms in 2021 in connection with the refinancing of Group debt. EBITDA also contributed negatively to the development (DKK 114m), which was partly offset by lower net inter- est paid (DKK 136m) related to refinancing. The DKK 346m increase in cash outflow from investing activities to DKK 1,316m, was due primarily to higher in- vestments (DKK 194m), divestment of Cloudeon in 2021 (DKK 97m) as well as acquisition of activities from TDC Holding (DKK 51m). Cash flow from financing activities increased by DKK 1,929m to DKK 755m. The above-mentioned change in net working capital was used to reduce amounts owed to Group companies (DKK 1,095m), while Nuuday's share of TDC Holding's cash pool was transferred to Nuuday (DKK 865m). 2022 guidance follow-up EBITDA performance in 2022 was in line with our guid- ance; namely that EBITDA would be somewhat lower in 2022 compared with 2021, driven by significant invest- ments in customer experiences as well as the continued migration of customers to fibre infrastructure. Cash generation was, as guided, materially lower in 2022 than in 2021 driven by the development in net working capital combined with the IT transformation. 2023 guidance We expect a flat development in service revenue in 2023, which will be a year with significantly higher investments in our business transformation, as well as continued migration of customers to fibre infrastruc- tures. Consequently, we expect that both EBITDA including and excluding transformation costs will be somewhat below the level in 2022. Underlying Capex (DKKm) 1,136 Loss excluding special items (DKKm) Cash flow from operating activities (DKKM) Employees excluding transformation FTEs (EOY) 138 959 3,515 Nuuday Annual Report 2022 19#20nuuday In brief Business and strategy Performance Corporate governance Financial statements Corporate governance Cinited Corporate governance statement 21 22 29 32 33 Risk management Sustainability highlights Board of Directors Executive Management Nuuday Annual Report 2022 20#21nuuday In brief Business and strategy Performance Corporate governance Financial statements Corporate governance statement We work proactively with corporate governance and aim to provide transparency for our stakeholders as a means of ensuring our long-term value creation. Our governance model In accordance with Danish legislation, Nuuday has a two-tier management structure consisting of a Board of Direc- tors and an Executive Committee (the Executive Leadership Team). The Board of Directors is responsible for the overall direction of the company and for ap- pointing a competent Executive Leader- ship Team. The Executive Leadership Team is responsible for the day-to-day management of the company. The re- sponsibilities and duties between the Board of Directors and the Executive Leadership Team are clearly outlined and described in the Rules of Procedure for the Board of Directors and the Rules of Procedure for the Executive Leader- ship Team. The Board of Directors Nuuday's Board of Directors is composed of six members elected by the General Meeting. Three additional members are elected by the employees, bringing the number of board members to a total of nine. The board members elected by the General Meeting are up for election every year and may be re-elected. Pursuant to Danish legislation, Nuuday employees are entitled to representa- tion on the Company's Board of Directors in the form of employee- elected board members equivalent to half of the total number of board mem- bers elected at the General Meeting. The employee-elected board members are elected for a four-year period, and have the same rights, obligations and responsibilities as the board members elected by the General Meeting. Nuuday's Board of Directors believes that diversity in general strengthens the Board and seeks to reflect this balance in the composition of the Board. As part of the Board of Directors' evaluation, the Board also assesses whether the board members have the required skills and ex- perience or if members' expertise should be updated in some respects. The gender composition among the board members elected by the General Meeting was 66.67% male and 33.33% female on 31 December 2022, and thus the Board of Directors has achieved its objective that among board members elected by the General Meeting, both genders shall be represented by at least 33% by the end of 2023. Board committees Judo The Board of Directors has established a Compensation & Nomination Committee, an Audit Committee and a Health & Safety Committee to supervise certain fields and prepare cases to be decided on subsequently by the Board of Directors. Whistleblower scheme Nuuday has been covered by TDC Hold- ings' whistleblower scheme since 2011. In 2021, Nuuday adopted a separate whistleblower scheme. Our employees and partners now have access to swiftly and confidentially - and if required, anonymously - submit reports of viola- tions or potential violations via a special independent and autonomous channel to an independent, autonomous whistle- blower unit. Nuuday Annual Report 2022 21#22nuuday In brief Business and strategy Performance Corporate governance Financial statements Risk management Risk management governance Nuuday involves all layers of the organisation in its risk management approach. From enterprise risks affecting Nuuday's overarching strategic goals to operational or technical risks affecting our IT landscape, we use risk management to weigh options and support informed decision making. Based on internationally recognised standards such as ISO 31000, COSO ERM, and FAIR, our policy framework is underpinned by procedures and guidance, thus creating a strong foundation for our risk management governance. While Nuuday's Board of Directors is ultimately accountable for risk management and compliance, we work with a three-lines of defence model. The first line comprises our business units, each of which are responsible for effective risk management (identifica- tion, assessment, mitigation, etc.). The second line consists of our nine domains, each with risk and compliance specialists: Security & Fraud • Human Resources Legal & Compliance •Image, PR & Public Affairs Operations . • Finance •Health & Safety • Commercial • Transformation Execution Establishing these domains ensures that Nuuday follows the standardised risk management lifecycle and receives centrally aligned risk and compliance support across all business units from subject matter experts. The second line assists the first line with assessments and offers guidance regarding mitigation plans. Monitor >>> $ + Action Identification Risk Management Lifecycle Response 迎 Assessment Nuuday Annual Report 2022 22#23nuuday In brief Business and strategy Performance Corporate governance Financial statements Our third line is an audit function respon- sible for independently reviewing the risk and compliance design and its effec- tiveness. Risk appetite Pursuing our business objectives involves taking risks, with a potential for risks af- fecting the outcome of these objectives. We have defined a risk appetite for each of the nine domain areas, approved by the executive management team and the Board of Directors. Nuuday's risk appetite reflects a desire to balance risk exposure and risk reluc- tance, thus avoiding both excessive risk taking and excessive caution. Risk management lifecycle Identification Risks are identified in various ways, in- cluding via targeted surveys, audit find- ings, management meetings, or ad-hoc. Identified risks are reported through defined channels, dependent on the type of risk. Assessment Risk assessments take various forms but have the same goal: to measure the like- lihood and impact of an identified risk being realised. Response Based on the risk assessment, one or multiple responses are appropriate. A re- sponse might be to "Treat," "Tolerate," "Transfer," "Terminate," or "Take no ac- tion." Taking no action when facing a risk is an acceptable solution only if the risk assessment score indicates the risk iswithin the approved risk appetite. Action Here we fulfil the action determined as the appropriate response. This step also involves reviewing the strategy to ascer- tain the efficacy of the response and determine whether another response activity is required. Monitor The risk picture, including relevant vul- nerabilities or threats that could affect the treatment or realisation of a given risk, is monitored after actions have been completed. Continuously, a mini- mum of once annually, or if the risk "Disclosure of information due Questionnaire to an external attack" 歐 Risk statements Input System/application/service Entity Risk assessments Risk details Risk criteria 1-6 x 1-6 Scale Treat, tolerate, terminate or transfer? Heatmap 食 Risk response task Respond to risk Strategy implemented - how do the actions affect the risk? Monitor risk - regular checks and surveillance for change in status The process Risk identification Evaluation - something worries us - How severe? - Action to take? Output "Disclosure of information in Salesforce due to leaked administrator credentials" Risk How does the risk compare with other risks? Heatmap "Validate that X, Y, Z have been implemented to..." 實 Risk response task Are we within risk appetite, or do we need another response task? Result Ensure the risk stays at the expected level Reports and dashboards Nuuday Annual Report 2022 23#24nuuday In brief Business and strategy Performance Corporate governance Financial statements picture changes significantly, the risk returns to the Assessment stage of the Risk Management Process. Documentation To ensure accountability, the identifica- tion, assessment, response to and treat- ment of risks is documented in adequate detail. The documentation can be made availa- ble to internal and external stakeholders on a need-to-know basis unless there are concerns of confidentiality. In such cases, management approval is required. Integrated risk management & reporting Transparency is a key aspect of Nuuday's risk management. This is achieved by ensuring that appropriate stakeholders are aware of risks. Risks associated with e.g. incidents, changes, or system operations are han- dled as an integrated part of the given process to ensure that their potential impact on the organisation is docu- mented and a plan is in place in case the risk materialises. Risks associated with programmes and projects are handled by the steering groups, with project/programme manag- ers receiving assistance from the domain risk managers when necessary. Third-party risks are handled in collabo- ration with the suppliers, i.e. we stipulate controls for the suppliers, depending on the service provided. We mitigate any identified risks before entering con- tracts, and where this is not possible, remaining risks are documented and handled systematically. Strategic risks identified in other con- texts, including management meetings, are discussed and documented, so appropriate response tasks can be established in the relevant organisational areas. For each risk identified, responsibilities are assigned, and progress is monitored and evaluated. Risks identified are consolidated and presented to Nuuday's executive man- agement on a quarterly basis. Any risks falling outside the defined appetite are presented for approval. The Nuuday Audit Committee receives a consolidated risk overview and status as well as information about the most criti- cal risks on a quarterly basis. On the following pages, we describe some of the main risks that Nuuday faces, with information about the risk's trend, impact and mitigation initiatives. Nuuday Annual Report 2022 24#25nuuday Risk & trend In brief Business and strategy Performance Corporate governance Financial statements Risk domain Details & impact New or current competitors taking market share Commercial Stable Forced price increases from suppliers Commercial Stable > Consumer savings - "downspin" Commercial Increasing Entertainment content: price increases and taxation Commercial Increasing Denmark has a competitive telecommunications landscape. Increased competition and continuing price pressure affect Nuuday's ability to establish sustainable pricing in B2C and B2B markets. Nuuday relies on a number of suppliers for support in delivering products and services. Increases in prices from key suppliers can erode profit margins and negatively affect Nuuday brands' competitiveness. Mitigation initiatives • Improve customer experience through fully digital customer journeys • Retain best network status • Continue to provide high-quality services and improve NPS • New attractive product releases • Improving contractual terms • Reduce costs on major expenses (i.e. move to own IP core) We are seeing inflation, pressure on salaries, with a trend of people generally spending less money. Consequently, people are choosing to save on, for example, mobile phone subscriptions by choosing cheaper packages, thus lowering the Average Revenue Per Unit. This could potentially spread into TV and broadband segments. • • Monitoring market tendencies Continue to strengthen areas of differentiation (network quality and 5G) Offer highly competitive and attractive propositions across all consumer brands • Address the entirety of the consumer and business mobile market Content producers continue to raise their prices for entertainment, which particularly affects the YouSee & Telmore brands. On TV, increasing price pressure from streaming providers coupled with increasing content costs (especially related to premium sports) could further accelerate existing downward trends, with customers 'shaving' or 'cutting' the cord on their TV subscriptions. Additionally, the Government has suggested to submit a proposal to the Danish parliament to add a value-added tax on copyrighted material. This would have a heavy impact on the viability of existing business models. • Optimise products and pricing to ensure that TV packages remain relevant for as many customers as possible • • Invest in developing attractive next-generation entertainment products to cater for the rapidly growing combi-viewer segment that values both streaming and TV channel content Pursue a full household strategy and incentivise purchasing multiple services and products Nuuday Annual Report 2022 25#26nuuday In brief Business and strategy Performance Corporate governance Financial statements Risk & trend Risk domain Cyber attacks Security & Fraud Stable > Ransomware on core systems Security & Fraud / Operations Increasing Network infrastructure downtime Operations Stable Regulatory privacy Stable > Details & impact Mitigation initiatives The Centre for Cyber Security's latest report on threats against the Danish telecommunication sector indicates that the threat of cyber crime is "Very High." Depending on the nature of the cyber attack, the processing, confidentiality, integrity, availability, stability, capacity, performance, continuity and/or the resilience of the information technologies Nuuday uses can be impacted. • Investing in security and operations of network infrastructure • Focused efforts on network resilience through risk and incident management • Continued dialogue with Danish authorities and customers to ensure data protection and confidentiality With increased threats of cyber crime, the risk of ransomware also increases. Depending on the attack vector and affected systems, ransomware could have a high impact on Nuuday's ability to continue its business. • Establishing new ways to improve resilience • Crisis management exercises Nuuday's business relies on functioning telecommunication infrastructure (mobile network, coaxial, fibre, etc.). When network providers face downtime, Nuuday's customers may be unable to make telephone calls, use the internet, or consume entertainment. Events that do not fulfil customer expectations for security and quality can negatively impact retention. • Working with infrastructure providers to ensure speedy recovery • Review and testing of business continuity plans Legal & Compliance European and national laws stipulate how Nuuday can process personal information. The current legislative landscape regarding transferring personal data to non-EU countries has been in focus. A general compliance risk relates to customer data being processed in breach of relevant privacy laws and regulations, potentially resulting in large fines or negative references in public arenas. Data protection network with Data Privacy Managers anchored in each of Nuuday's organisational areas Integration of Data Processing Agreements & Transfer Impact Assessments into the procurement process • Dedicated resources to support with data subject requests Privacy by Design principles integrated into software development & project lifecycles Nuuday Annual Report 2022 26 2#27nuuday Risk & trend IT & business transformation Stable > In brief Business and strategy Performance Corporate governance Financial statements Risk domain Details & impact Mitigation initiatives Transformation Execution / Human Resources Nuuday is progressing with its transformation, which is key in engaging customers, increasing productivity, and guaranteeing high-quality services in the future. A number of risks are associated with this transformation, such as employee engagement, human resource management, technical integrations and de-coupling of legacy IT. The materialisation of risks affecting the transformation of Nuuday's IT stack and business is in focus, and the identified risks are being broken down at programme and project level to prioritise appropriate mitigation efforts before the risks are realised. • Management reiteration of transformation plan and Nuuday's strategic objectives at town hall meetings to inspire confidence in direction and journey • Handle programme risks in collaboration with risk domains and steering groups to find suitable solutions • Seconding of workforce supporting legacy IT systems to calm employee concerns • Use feedback from employee surveys to strengthen satisfaction, motivation, loyalty and culture • Ensure targets and expectations are clear to all employees • Reinforce a culture of ongoing feedback, and focus on continuous development Political & legal changes Image, PR & Public Affairs Stable Financial risks Finance EU and national governmental changes often lead to new political objectives. With these new objectives, we often see political decisions or new legislation. Depending on the magnitude, these changes can profoundly affect Nuuday's ability to carry out its business and/or fulfil operational targets. • Nuuday participation in industry groups and discussions on proposed legislation • Continued dialogue with authorities, politicians and municipalities See Financial Statements - Section 4.3 "Financial Risks" for details • N/A Human rights Stable > Image, PR & Public Affairs/ Legal & Compliance Nuuday has responsibility for our direct employees, the employees of partners and companies in our supply chain, including the risk of forced labour, discrimination or harassment and misuse or loss of personal data, or data breaches. If Nuuday or Nuuday partners violate fundamental human rights, this may lead to legal action as well as bad publicity and customer reactions negatively impacting Nuuday. Procedures and policies & partner code of conduct • Based on a thorough risk assessment, we conduct audits at our suppliers each year, particularly screening for adherence to the UN Global Compact Assessment • Industry collaboration through JAC - the Joint Alliance for CSR Nuuday Annual Report 2022 27#28nuuday In brief Business and strategy Performance Corporate governance Financial statements Risk & trend Anti-corruption and bribery Stable > Risk domain Image, PR & Public Affairs / Legal & Compliance Details & impact Nuuday is a large employer in Denmark with suppliers across the globe. With multiple contract relationships there is always a risk that bribery or corrupt practices could occur, influencing business decisions. If corruption or bribery occurs, it may lead to legal action as well as bad publicity and customer reactions negatively impacting Nuuday. Mitigation initiatives • Anti-corruption policy commits Nuuday to complying with the UN Convention against corruption • Raising awareness and putting in place resources and training for employees • Whistleblower policy that allows for the anonymous reporting of suspected wrongdoings at the company Partner Code of Conduct for suppliers, partner organisations and employees • Environment and climate Stable Social and employees Stable Image, PR & Public Affairs / Legal & Compliance Several potential environmental and climate risks may be linked to our operations and supply chain. Nuuday has a responsibility to try to reduce our own resource consumption, emissions and waste in production and to influence partners and suppliers to act equally responsibly. If Nuuday does not show credible action on environment and climate matters, it may generate bad publicity and customer reactions negatively impacting Nuuday. • Nuuday has set ambitious carbon emissions reduction targets for Scopes 1, 2 & 3 • ISO 14001 certification covering our whole operation • Detailed ESG reporting on climate and environment metrics Nuuday has embarked on a revised sustainability strategy with sustainable procurement and products as a key pillar • Nuuday aims to retain an Ecovadis platinum rating as a token of recognition that Nuuday is a leader in sustainability Human Resources / Health & Safety Nuuday focuses on retaining the services of its key personnel and invests in attracting suitable and qualified talents to ensure a good working environment e.g., with no accidents or stress incidents. Nuuday's success depends largely on our ability to attract and retain key personnel. The competition for qualified personnel is intense and with limited availability of candidates with the required knowledge of the telecoms industry and relevant experience in Denmark. • 88% of employees are covered by collective agreements Occupational health and safety policy and certification to ISO 45001 standard • Flexible working conditions. • Quarterly employee engagement surveys • Diversity, equity, inclusion & belonging (DEIB) Policy Nuuday Annual Report 2022 28#29nuuday In brief Business and strategy Performance Corporate governance Financial statements Sustainability highlights In recognition of our sustainability efforts, the leading rating agency EcoVadis awarded us platinum rating for the second consecutive year, placing us as a global top 1% performer on sus- tainability. Revised sustainability strategy In 2022, we decided to revise our sus- tainability strategy to reflect the status of Nuuday as an independent service provider separate from the former TDC Group. Based on a comprehensive materiality assessment and in close collaboration with the Nuuday Board of Directors, we now have a robust sustainability frame- work - aligned with the UN Sustainability Goals to guide our efforts in this domain going forward. Key activities Directly translating the revised strategy into actions, Nuuday joined JAC (the Joint Alliance for CSR), which is the leading association of telecom operators aiming to verify, assess and develop sustainability implementation by industry suppliers. We also set out to pursue avenues for more sustainable products and reduce the use of single-use materials in our value chain. Concrete examples in this area in 2022 were the launch of a new take-back programme to ensure circulation of used devises, and our new DOCSIS 4.0 modems that are made of recycled plastic. In 2022, we continued our journey towards becoming one of the most sustainable telcos in the world, delivering on our ambitious climate agenda to become carbon neutral throughout our entire value chain within this decade. This will continue as a major theme in 2023, when we plan to hit our first hard milestone on our climate change agenda to reduce Scope 1 & 2 CO2 emissions by 50% on our way to become Scope 1 & 2 net-zero by 2028. On our social agenda, we continued to support initiatives that strengthen children's digital skills and digital life in general, extending our partnership with Børns Vilkår on digital conduct and technical assistance to operate Bornetelefonen (Children's Helpline) that was able to effectuate 60,450 counselling conversations with children and youngsters in 2022. Again in 2022, Nuuday hosted Girls' Day in Science, where a group of young women came to visit us for a talk about careers, education and jobs within IT. We also proudly took part in the Coding Class initiative, introducing pupils to computer programming and problem solving together with YouSee. Sustainability framework Strategic focus areas Combating climate change Eliminate Scope 1 & 2 emissions by 2028, and achieve cnet zero across the en- tire value chain (Scope 3) by 2030 13 ACTION Foundation Children's digital lives: Offer support to children so they can have a safe digital life, and provide IT development learn- ing opportunities for pupils acquiring skills for a digital future Diversity, equity, inclusion & belonging (DEIB) Ensure equal opportunities, build an inclusive workplace where our colleagues feel they belong, de- velop leaders and employees, and strive to obtain gender equality in senior management 5 GENDER EQUALITY QUALITY EDUCATION Sustainable procurement & products Maximise supply chain sustainability by engaging with top suppliers, while of- fering a range of sustainable solutions and integrating ef- forts into our brand propositions 12 RESPONSIBLE CONSUMPTION AND PRODUCTION Со Responsible operations Ensure the highest standards for issues such as safety, security, employee well-being, GDPR, pri- vacy and tax transparency to take care of our employees and meet stakeholder expectations DECENT WORK AND ECONOMIC GROWTH Nuuday Annual Report 2022 29#30nuuday In brief Business and strategy Performance Corporate governance Financial statements Together with the Center for Digital Pædagogik and Story House Egmont, we produced a special issue of Donald Duck "Anders And & Co - Online med Anders" educating children about digital life and using the internet safely. The magazine was handed out in YouSee's 40 stores free of charge and made available online. Internally at Nuuday, our key focus for the year was to further develop our programme on inclusive leadership and cognitive diversity, which is at the very core of our programme on diversity, eq- uity, inclusion and belonging (DEIB). Fos- tering this more inclusive culture where colleagues thrive and feel they belong is a key to obtaining an improved and sus- tainable business performance. In fact, 400 Nuuday leaders have received com- prehensive training CO in this area during 2022. We also saw very high scores in our annual MyVoice survey on inclusion benchmarks, with the employees' score for feeling "able to be themselves" at work reaching 90/100, and "feeling valued" scoring 84/100. Responding to external factors Although not part of our strategic agenda - but rather reacting to the outbreak of the tragic war of aggression in Ukraine - we spent considerable resources on responding diligently to the situation. Initially, our key focus was on providing physical security for our own contract agents in Ukraine and their families as well as providing free telephony traffic to and from Ukraine in support of Ukrainians living in Denmark and Danes stationed in Ukraine. During the first months of the invasion, several initiatives were undertaken by Nuuday brands. YouSee offered devices to refugees in ESG Denmark and clothing to refugees at the Polish border, while Relatel equipped buses from Ukraine with Wi-Fi, and TDC Erhverv set up equipment at schools converted into refugee centres. In light of the Ukraine refugee situation, Nuuday relaunched TidsBanken - a concept supporting voluntary charity work. TidsBanken allows employees who Gatel are regularly active in voluntary charity work to spend one day on charity work compensated by Nuuday. As the war entered its next phases and Ukrainian refugees began arriving in Denmark, Nuuday formed a joint indus- try initiative with the other Danish mo- bile service providers to offer 20,000 SIM cards free of charge, allowing Ukrainian refugees arriving in Denmark to contact friends and family and estab- lish themselves in their new surroundings. For a full account of Nuuday's activities and achievements throughout 2022 within the areas of sustainability, see Nuuday's 2022 Sustainability Report at Nuuday.com/sustainability. 8 Nuuday's Sustainability Report addresses the reporting requirements under sec- tions 99a, 99b and 99d of the Danish Financial Statements Act. It also serves as Nuuday's Communication on Progress to the UN Global Compact, of which Nuuday is a proud member. Nuuday Annual Report 2022 30#31nuuday In brief Business and strategy Performance Corporate governance Financial statements Board of Directors Michael Parton Chair of the Board Appointed (until): 2022 (2023) Nationality: British Year of birth: 1954 Non-independent Board function Shareholder elected Chairman of the Health & Safety Committee; member of the Compensation & Nomination Committee; member of the Audit Committee Education: Chartered Management Accountant Sofia Arhall Bergendorff Vice chair Appointed (until): 2022 (2023) Nationality: Swedish Year of birth: 1969 Independent Board function Shareholder elected Chairman of the Compensation & Nomination Committee; member of the Health & Safety Committee Education: MBA, INSEAD, France & Singapore Peter Nyegaard Board member Appointed (until): 2022 (2023) Nationality: Danish Year of birth: 1963 Independent Board function Shareholder elected Chairman of the Audit Committee; member of the Compensation & Nomination Committee Education: MSc in Economics, University of Copenhagen, Denmark. Other Board positions: Danmarks Skibskredit A/S (vice chair), Moment Group A/S, Delete Group Oy, Dens A/S Soren Abildgaard Board member Appointed (until): 2022 (2023) Nationality: Danish Year of birth: 1968 Independent Board function Shareholder elected Education: AMP, Harvard Business School Executive Education MSc in International Marketing, Southbank University, UK Joe Boorman Board member Appointed: 2022 (2023) Nationality: British Year of birth: 1972 Independent Board function Shareholder elected Member of the Audit Committee Education: Chartered Accountant, (BA Hons.) Geography, University of Sheffield, UK Nuuday Annual Report 2022 31#32nuuday In brief Business and strategy Performance Corporate governance Financial statements Board of Directors Susana Leith-Smith Board member Appointed: 2022 (2023) Nationality: Portuguese Year of birth: 1977 Non-independent Board function Shareholder elected Member of the Audit Committee; member of the Compensation & Nomination Committee; member of the Health & Safety Committee Education: MSc in Modern History & International Relations, University of St Andrews, UK Other Board positions: Arqiva Group Limited, TDC Holding A/S, DKT Holdings ApS, DKT Finance ApS, Telekommunikation ApS, Open Fiber S.p.A, Womankind Worldwide Thomas Lech Pedersen Board member Appointed (until): 2021 (2024) Nationality: Danish Year of birth: 1976 Board function Employee elected Education: AU, Human Resources, Academy Aarhus, Denmark Other Board positions: Association of Managers and Employees in Special Positions of Trust Tobias Tolstrup Board member Appointed (until): 2021 (2024) Nationality: Danish Year of birth: 1985 Board function Employee elected Education: AP, Marketing Management, Viborg Erhvervsakademi/Manchester Metropolitan University, Denmark/UK Zanne Stensballe Board member Appointed (until): 2021 (2024) Nationality: Danish Year of birth: 1969 Board function Employee elected Member of the Health & Safety Committee Education: Graduate diploma in Business Administration (Marketing Management), Storstroms Handelshøjskolecenter, Denmark & eMBA, AVT Business School, Denmark Nuuday Annual Report 2022 32 32#33nuuday In brief Business and strategy Performance Corporate governance Financial statements Executive Management Jon James Chief Executive Officer Year of birth: 1969 Education: BA in Economics and History, Cambridge University, UK Henrik Christiansen Chief Financial Officer Year of birth: 1967 Education: BSc in Management Accounting, Copenhagen Business School, Denmark Monica Gullin Chief Technology Officer Year of birth: 1968 Education: MSc in Electrical Engineering, KTH Stockholm, Sweden Maj Britt Andersen Chief Human Resources Officer Year of birth: 1967 Education: MSc in International Business and Modern Languages, Copenhagen Business School, Denmark Nuuday Annual Report 2022 33#34nuuday In brief Business and strategy Performance Corporate governance Financial statements Executive Management Michael Stinner Head of CX & Operations Year of birth: 1974 Education: Business Administration and IT, IHK Co- logne, Germany Christian Morgan Head of YouSee Year of birth: 1984 Education: MSc in Economics and Business Administration, Copenhagen Business School, Denmark John Henriksen Head of TDC Erhverv Year of birth: 1969 Jens Grønlund Head of NuuBrands Education: IT Technology, Tietgen Business College, Denmark Year of birth: 1984 Education: MSc in Strategy and Organisation, University of Southern Denmark, Denmark Nuuday Annual Report 2022 34#35nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Financial statements Make Nuuday Annual Report 2022 35#36nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Financial statements Content Notes to consolidated financial statements Consolidated income statement Consolidated statement of comprehensive income Consolidated balance sheet Consolidated statement of cash flows Consolidated statement of changes in equity Awwww 37 Section 1 - Basis of Section 4 - Capital structure 37 preparation and financing costs 38 1.1. Accounting policies 42 4.1. Equity 68 39 1.2. 40 Critical accounting estimates and judgements 4.2. Loans 69 43 4.3. Financial risks 70 1.3. New accounting standards 43 Notes to consolidated financial statements 41 4.4. Financial income and expenses 4.5. Maturity profiles of financial 71 Parent company financial statement 81 Revenue Section 2 - Profit for the year 2.1. instruments 72 45 2.2. Cost of sales 47 Section 5 - Cash flow Management statement 99 2.3. External expenses 47 2.4. Personnel expenses 48 5.1. Change in working capital 5.2. Investment in enterprises 75 75 15 Independent auditor's report 100 2.5. Depreciation, amortisation and impairment losses 49 2.6. Special items 49 6.1. Section 6 - Other disclosures Incentive programmes 77 2.7. Income taxes 51 6.2. Related parties 78 6.3. Fees to auditors 79 Section 3 - Operating assets 6.4. Other financial commitments 79 and liabilities 6.5. Pledges and contingencies 80 3.1. Intangible assets 55 6.6. Events after the balance 3.2. Property, plant and equipment 59 sheet date 80 3.3. Lease assets and liabilities 61 6.7. Overview of group companies 3.4. Trade receivables 63 at 31 December 2022 80 3.5. Contract assets and liabilities 65 3.6. Prepaid expenses 65 3.7. Provisions 66 Nuuday Annual Report 2022 36#37nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Consolidated income statement (DKKm) Revenue Cost of sales Gross profit Consolidated statement of comprehensive income Note 2022 2021 (DKKm) 2.1 2.2 14,674 (9,827) 4,847 222 2.3 DW (1,372) 14,657 (9,664) 4,993 (1,426) Loss for the year Other comprehensive income/(loss) (1,829) 63 (1,800) 56 Total comprehensive loss External expenses Personnel expenses 2.4 Other income 2.1 Operating profit before depreciation, amortisation and special items (EBITDA) Depreciation, amortisation and impairment losses Special items Operating loss (EBIT) Financial income and expenses Loss before income taxes Income taxes Loss for the year Attributable to: Shareholders of Nuuday A/S Loss for the year 1,709 1,823 2.5 2.6 (1,550) (1,712) (66) (124) 93 (13) 4.4 (320) (400) (227) (413) 2.7 37 23 (190) (390) (190) (190) (390) (390) Note 2022 2021 (190) (390) (190) (390) Nuuday Annual Report 2022 37#38nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Consolidated balance sheet Assets (DKKm) Non-current assets Intangible assets Note 2022 2021 Equity and liabilities (DKKm) Note 2022 2021 Equity Property, plant and equipment Lease assets www 3.1 12,764 12,916 Share capital 3.2 1,144 1,140 3.3 327 378 Retained earnings Total equity 4.1 0 0 6,543 386 6,543 386 Joint ventures, associates and other investments 3 3 Other receivables 12 13 Non-current liabilities Prepaid expenses 3.6 7 Total non-current assets 14,257 14,450 Deferred tax liabilities Provisions 2.7 1,554 1,587 3.7 49 Lease liabilities 3.3 274 61 317 Current assets Loans from group companies 4.2.4.5 Inventories Trade receivables 3.4 245 1,132 210 1,046 Other payables 228 Total non-current liabilities 2,105 7,453 219 9,637 Other receivables 8 10 Contract assets 3.5 676 562 Current liabilities Amounts owed by group companies 865 Loans from group companies 4.2.4.5 2,873 1,547 Income tax receivable 2.7 2 24 Lease liabilities 3.3 83 82 Derivative financial instruments 97 Trade payables 1,691 1,603 Prepaid expenses 3.6 629 607 Other payables 830 832 Cash Total current assets 402 2 Contract liabilities 3.5 2,196 2,167 3,191 3,326 Amounts owed to group companies 1,090 1,478 Total assets 17,448 17,776 Derivative financial instruments Provisions 11 3.7 26 44 Total current liabilities 8,800 7,753 Total liabilities Total equity and liabilities 10,905 17,390 17,448 17,776 Nuuday Annual Report 2022 38#39nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Consolidated statement of cash flows (DKKM) Note 2022 2021 (DKKm) Note 2022 2021 Operating activities Operating profit before depreciation, amortisation and special items (EBITDA) Adjustment for non-cash items Payments related to provisions Special items Change in working capital 1,709 18 1,823 Financing activities Lease payments Change in interest-bearing receivables and payables 49 Costs relating to long-term loans 3.7 (7) (12) Total cash flow from financing activities (75) (79) 865 (1,095) (35) 755 (1,174) 2.6 (76) (114) 5.1 (412) 813 Total cash flow 398 2 Interest received Interest paid 13 (312) 5 Cash and cash equivalents at 1 January 2 (440) Effect of exchange-rate changes on cash and cash equivalents 2 Income tax received 2.7 26 22 Cash and cash equivalents at 31 December 402 2 Total cash flow from operating activities 959 2,146 Investing activities Investment in enterprises 5.2 (51) Investment in property, plant and equipment 3.2 (375) (339) Investment in intangible assets 3.1 (891) (733) Investment in other non-current assets (1) (4) Divestment of joint ventures and associates 97 Sale of other non-current assets 2 1 Change in loans to joint ventures and associates 8 Total cash flow from investing activities (1,316) (970) Nuuday Annual Report 2022 39#40nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements Consolidated statement of changes in equity (DKKm) Equity at 1 January 2021 Loss for the year Total comprehensive income Total transactions with shareholders Equity at 31 December 2021 Loss for the year Total comprehensive income Share capital Retained earnings 0 Total 776 776 (390) (390) (390) (390) 386 386 (190) (190) (190) (190) Contributions of equity 6,347 6,347 Total transactions with shareholders 6,347 6,347 Equity at 31 December 2022 6,543 6,543 Nuuday Annual Report 2022 40#41nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 1 Basis of preparation This section sets out the basis of preparation, which relates to the financial statements as a whole. Where an accounting policy is specific to one note, the policy is described in the note to which it relates. Similarly, critical sources of estimation uncertainty are described in the notes to which they relate. In this section 1.1. Accounting policies 42 1.2. Critical accounting estimates and judgements 43 1.3. New accounting standards 43 Nuuday Annual Report 2022 41#42nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements 1.1 | Accounting policies Nuuday's consolidated financial state- ments for 2022 have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and further disclosure requirements in the Danish Financial Statements Act. The consolidated financial statements are based on the historical cost conven- tion, except for financial assets and liabilities that are initially measured at fair value adjusted for transaction costs if they are not subsequently measured at fair value through the income state- ment. Trade receivables are measured at their transaction price. When preparing the consolidated finan- cial statements, Management makes assumptions that affect the reported amount of assets and liabilities at the balance sheet date, and the reported income and expenses for the accounting period. The accounting estimates and judgements considered critical to the preparation of the consolidated financial statements are shown in note 1.2. The accounting policies are unchanged compared with the policies applied in the Annual Report 2021. Consolidation policies The consolidated financial statements include the financial statements of the parent company and subsidiaries of which Nuuday A/S has direct or indirect control. Joint ventures of which the Group has joint control and associates of which the Group has significant influence are recognised using the equity method. The consolidated financial statements have been prepared on the basis of the financial statements of Nuuday A/S and its consolidated companies, which have been restated to Group accounting policies, combining items of a uniform nature. On consolidation, intra-group income and expenses; shareholdings, dividends, internal balances; and realised and unre- alised profits and losses on transactions between the consolidated companies have been eliminated. Nuuday Annual Report 2022 42#43nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent Company Statements 1.2 | Critical accounting estimates and judgements 1.3 | New accounting standards The preparation of Nuuday Group's Annual Report requires Management to exercise judgement in applying the Group's accounting policies. It also requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses. Actual results may differ from those estimates. Notes 2.1 Revenue 2.6 Special items 3.1 Intangible assets Estimates and underlying assumptions are reviewed on an ongoing basis. Revi- sions are recognised during the period in which the estimates are revised and during any future periods affected. The following areas involve a higher degree of estimates or complexity and are outlined in more detail in the related notes: Critical accounting estimates and judgements Assessment of principal or agent Assessment of contracts involving complex sale of goods and services Assessment of special events or transactions Assumptions for useful lives Assumptions used for impairment testing 3.4 Trade receivables Assessment of expected losses Estimates /judgements Judgement Estimate/ Judgement Judgement Estimate Estimate/ judgement Estimate Nuuday Group has adopted the new standards, amendments to standards and interpretations that are effective for the financial year 2022. None of the changes have affected recognition or measurement in the financial statements nor are they expected to have any future impact. IASB has approved a number of new accounting standards and changes to standards that are not yet effective. Nuuday Group has evaluated the stand- ards and as none of them are expected to be relevant to the Group, they are not expected to impact on the financial statements. Nuuday Annual Report 2022 43#44nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 2 Profit for the year This section focuses on disclosures of details of the Nuuday Group's results for the year, including segment reporting, special items and taxation. A detailed review of revenue, EBITDA and profit for the year is provided in the section "Nuuday performance" in the Management's review. In this section 2.1. Revenue 2.2. Cost of sales 2.3. External expenses 2.4. Personnel expenses 2.5. Depreciation, amortisation and impairment losses 2.6. Special items 2.7. Income taxes 45 47 5278 47 48 49 49 65 51 Nuuday Annual Report 2022 44 44#45nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.1| Revenue (DKKm) 2022 2021 Sales of goods recognised at a point in time Sales of services recognised over time Total 1,394 13,280 1,364 13,293 14,674 14,657 Revenue specified by services (DKKm) 2022 2021 Landline voice Mobile services Internet & network TV Other services Total 746 5,085 806 4,907 3,460 3,474 3,452 1,931 14,674 3,438 2,032 14,657 AIA Critical accounting estimates and judgements Revenue recognition for a telecom oper- ator is a complex area of accounting that requires management estimates and judgements. Recognition of revenue depends on whether the Group acts as a principal in a transaction or an agent representing another company. Whether the Group is considered to be the principal or agent in a transaction depends on an analysis of both the form and substance of the cus- tomer agreement. When the Group acts as the principal, revenue is recognised at the agreed value, whereas when the Group acts as an agent, revenue is rec- ognised as the commission the Group receives for arranging the agreement. Judgements of whether the Group acts as a principal or as an agent impact on the amounts of recognised revenue and operating expenses, but do not impact. on net profit for the year or cash flows. Judgements of whether the Group acts as a principal are used primarily in trans- actions covering content. When the Group concludes contracts involving complex sale of goods and services, management judgements are required to determine whether goods and services shall be recognised together or as separate goods and services. Management estimates are also used for allocating the transaction price to the individual elements based on their respective fair values, if judged to be recognised separately. For example, business customer contracts can com- prise several elements related to mobile phones, subscriptions, leases, etc. Nuuday Annual Report 2022 45#46nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.1 Revenue (continued) § Accounting policies Revenue is measured at the fair value of the consideration receivable after deducting sales tax and discounts relat- ing directly to sales. Revenue comprises goods and services provided during the year. Goods and services may be sold separately or in bundled packages. Ser- vices include traffic and subscription fees, interconnection and roaming fees, fees for leased lines, network services, TV distribution as well as connection and installation fees. Goods include customer premises equipment, telephony hand- sets, PCs, set-top boxes, etc. Nuuday sells to households and the contracts are primarily perpetual, with the same service provided until the cus- tomer terminates the contract. Some of the contracts include a non-cancellation period of 6 months. The company also has contracts with antenna associations for longer periods. Nuuday sells digital solutions to enter- prises and public segments. Business offers modular solutions for small and medium-sized enterprises, as well as customised solutions for public and large enterprises. Modular self-service con- tracts are perpetual, and contracts with customised solutions are for longer peri- ods, i.e., 3-5 years. The significant sources of revenue are recognised in the income statements as follows: ⚫ revenues from subscription fees and flat-rate services are recognised over the subscription period • revenues from telephony are recog- nised at the time the calls are made • sales related to prepaid services are deferred, and revenues are recognised at the time of use ⚫ revenues from leased lines are recog- nised over the rental period • revenues from the sale of equipment are recognised on delivery. Revenues from equipment maintenance are rec- ognised over the contract period Revenue arrangements with multiple deliverables are recognised as separate units of accounting, independent of any contingent element related to the deliv- ery of additional items or other perfor- mance conditions. Such revenues include the sale of equipment located at cus- tomer premises, e.g. switchboards and handsets. The transaction price in revenue ar- rangements with multiple deliverables, such as handsets and subscriptions, are allocated to each performance obliga- tion based on the stand-alone selling price. Where the selling price is not di- rectly observable, it is estimated based on expected cost plus a margin. Dis- counts on bundled sales are allocated to each element in the contract. Contracts with similar characteristics have been evaluated using a portfolio approach due to the large number of similar contracts. In case of contracts for longer periods, and if the payment exceeds the services rendered, contract liabilities are recog- nised, see note 3.5. Revenues are recognised gross when Nuuday acts as the principal in a trans- action. For content-based services and the resale of services from content providers where the group acts as the agent, revenues are recognised net of direct costs. The percentage-of-completion method is used to recognise revenue from con- tract work in progress based on an assessment of the stage of completion. Contract work in progress includes in- stallation of telephone and IT systems, systems integration and other business solutions. Non-refundable up-front connection fees are included in the total transaction price for the contract with the customer and are thereby allocated to the identi- fied performance obligations (services). The period between the transfer of the service to the customer and the pay- ment by the customer is not of an extent that gives reason to adjust the transaction prices for the time value of money. Other income Other income comprises mainly account- ing items of a secondary nature com- pared with the company's principal activities. Nuuday Annual Report 2022 46#47nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.2 Cost of sales (DKKm) Mobile services Landline voice Internet & network TV Other services Total 2.3 | External expenses 2022 2021 (DKKM) 2022 2021 (3,510) (3,331) Marketing and advertising (203) (207) (368) (422) (1,780) (1,681) Subscriber acquisition and retention, cf. note 3.5 Properties (172) (163) (121) (110) (2,427) (1,742) (9,827) (2,457) (1,773) (9,664) IT (402) (339) Temps and personnel-related expenses (77) (59) Other (397) (548) Total (1,372) (1,426) Comments Nuuday derives the vast majority of its cost of sales from contracts with TDC NET A/S. In 2020 Nuuday entered into a contract with TDC NET A/S under which end-to- end mobile services are provided. The contract has an initial term of eight years, including an additional seven years phaseout period if the contract is not extended. See also note 6.2. § Accounting policies Cost of sales includes transmission costs and cost of goods sold. Transmission costs include external expenses related to operation of mobile and landline net- works and leased transmission capacity as well as interconnection and roaming costs related directly to the Group's pri- mary income. Cost of goods sold includes terminal equipment and transmission material as well as TV-programme rights and other content costs. § Accounting policies External expenses include expenses re- lated to marketing and advertising, sub- scriber acquisition costs (over the ex- pected term of the related customer re- lationship), IT, property, expenses related to staff, capacity maintenance, service contracts, etc. Nuuday Annual Report 2022 47#48nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.4 | Personnel expenses (DKKm) Wages and salaries (including short-term and long-term bonuses) Pensions (defined contribution plans) Social security Total Of which capitalised as non-current assets 2022 2021 (2,075) (180) (2,050) (178) (42) (2,297) (38) (2,266) 468 466 Total personnel expenses recognised in the income statement (1,829) (1,800) Remuneration for the Executive Committee¹ and the Board of Directors (DKKm) Base salary (incl. benefits). Cash bonus Pensions Long-term incentive programme Management incentive programme Redundancy compensation Key management in total Fee to the Board of Directors Total 2022 2021 7.2 6.6 3.9 3.1 1.2 0.9 1.3 0.4 0.9 0.5 14.5 11.5 4.0 7.3 18.5 18.8 7.5 0.5 26.0 19.3 1 During 2022, the remuneration to the Executive Committee (excluding redundancy compensation) comprised 1.5 members on average (2021: 2.0 members). Comments Wages, salaries, social security contributions, paid leave and sick leave, bonuses and other em- ployee benefits are recognised in the year in which the employee renders the related services. The average number of full-time employee equivalents was 3,668 (2021: 3,749). Incentive programmes See note 6.1. Nuuday Annual Report 2022 48#49nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.5 | Depreciation, amortisation (DKKm) and impairment losses 2.6 | Special items 2022 2021 (DKKm) 2022 2021 Amortisation of intangible assets, cf. note 3.1 (1,079) Depreciation of property, plant and equipment, cf. note 3.2 (381) (434) (1,186) Costs related to redundancy programmes Other restructuring costs, etc. (49) (103) (17) (5) Loss from rulings (16) Depreciation of lease assets, cf. note 3.3 (85) (85) Impairment losses, cf. notes 3.1 and 3.2 (15) Special items before income taxes (66) (124) (16) Of which capitalised as tangible and intangible assets Total 10 9 Income taxes related to special items 14 27 (1,550) (1,712) Special items related to joint ventures and associates 49 Total special items (52) (48) Cash flow from special items (DKKm) Redundancy programmes Rulings Other Total 2022 2021 (66) (91) (15) (10) (8) (76) (114) Nuuday Annual Report 2022 49#50nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.6 Special items (continued) AA Critical accounting judgements § In the income statement, special items are presented as a separate item. Special items include income or costs that in Management's judgement shall be disclosed separately by virtue of their size, nature or incidence. In determining whether an event or transaction is spe- cial, Management considers quantitative as well as qualitative factors such as the frequency or predictability of occur- rence of the transaction or event, including whether the event or transac- tion is recurring. This is consistent with the way that financial performance is measured by Management and reported to the Board of Directors, and assists in providing a meaningful analysis of the operating results of Nuuday. Accounting policies Special items are significant amounts that Management considers are not attributable to normal operations such as restructuring costs and special write- downs for impairment of intangible assets and property, plant and equip- ment. Special items also include gains and losses related to divestment of enterprises, as well as transaction costs and adjustments of purchase prices relating to the acquisition of enterprises. Special items consist of both recurring and non-recurring items. Special items are disclosed on the face of the income statement. Items of a simi- lar nature in joint ventures and associ- ates are recognised in profit from joint ventures and associates. Nuuday Annual Report 2022 50#51nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.7 Income taxes Income tax income/ Income taxes (DKKm) At 1 January Income taxes for the year Adjustment of tax for previous years Income tax paid Total (expense) 22 15 37 Shown in the balance sheet as: Tax payable/deferred tax liabilities Tax receivable/deferred tax assets Total Income taxes are specified as follows: Income excluding special items Special items Total 23 14 37 2022 Income tax payable/ (receivable) 8 ་ @ 8 8 (24) 1 2021 Deferred tax liabilities/ (assets) Income tax income/ (expense) Income tax Deferred tax payable/ (receivable) liabilities/ (assets) 1,587 (61) 1,625 (23) 34 23 (57) (10) (11) (8) 19 22 1,554 23 (24) 1,587 1,554 (2) (2) 1,554 (4) 27 23 1,587 (24) (24) 1,587 Nuuday Annual Report 2022 51#52nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.7 Income taxes (continued) 2022 2021 2022 2021 Deferred tax (DKKm) Deferred tax Deferred tax assets liabilities Total Effective tax rate (DKKM) DKKm % DKKm % Intangible assets Other Current 42 42 64 Danish corporate income tax rate 35 22.0 75 22.0 41 41 31 Limitation on the tax deductibility of interest expenses (33) (20.8) (67) (19.6) 83 83 95 Other non-taxable income and non-deductible expenses Adjustment of tax for previous years 6 3.9 (1) (0.2) 15 9.1 (11) (3.3) Intangible assets 1,456 1,456 1,473 Effective tax excluding special items 23 14.2 Property, plant and equipment (27) (27) (10) Special items 14 2.1 Lease assets and liabilities (6) (6) (4) Effective tax including special items 37 16.3 = 8AR (4) (1.1) 6.7 5.6 Tax value of tax-loss carryforwards (12) (12) (12) Other 60 Non-current (45) 1,516 60 1,471 45 1,492 Deferred tax at 31 December The total net deferred tax is recognised as a liability in the balance sheets. (45) 1,599 1,554 1,587 Comments Nuuday A/S and all its Danish subsidiaries participate in joint taxation with DKT Holdings ApS, which is the ultimate owner of the Nuuday Group and management company in the joint taxation. The jointly taxed companies are jointly and severally liable for the total income taxes, taxes paid on ac- count and outstanding residual tax (with additional payments and interest) relating to the joint taxation. Comments The increasing effective tax rate (excluding special items) was due primarily to an increased adjust- ment of tax for previous years. Nuuday Annual Report 2022 52#53nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.7 Income taxes (continued) § Accounting policies Tax for the year comprises current income tax, changes in deferred tax and adjustments from prior years and is rec- ognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income. Current income tax liabilities and current income tax receivables are recognised in the balance sheet as income tax payable or income tax receivable. Deferred tax is measured under the bal- ance-sheet liability method on the basis of all temporary differences between the carrying amounts and the tax bases of assets and liabilities at the balance sheet date. However, deferred tax is not recognised if the temporary difference arises from the initial recognition of goodwill or if it arises from initial recogni- tion of an asset or liability in a transac- tion other than a business combination that affects neither accounting nor taxable profit/loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by Nuuday Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets including the tax value of tax-losses carried forward are recognised when it is likely that these will. be utilised in the foreseeable future. Deferred tax is adjusted concerning elimination of unrealised intra-group profit and losses. Deferred tax is measured on the basis of the tax rules and tax rates effective under the legislation in the respective countries at the balance sheet date when the deferred tax is expected to be realised as current income tax. Changes in deferred tax as a result of changes in tax rates are recognised in the income statement except for the effect of items recognised directly in other comprehen- sive income. Deferred tax assets and liabilities are offset in the consolidated balance sheet. Nuuday Annual Report 2022 53#54nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 3 Operating assets and liabilities This section shows the assets used to generate Nuuday's performance and the resulting liabilities incurred. Assets and liabilities relating to Nuuday's financing activities are addressed in section 4. Deferred tax assets and liabilities are shown in note 2.7. In this section 3.1. Intangible assets 55 3.2. Property, plant and equipment 59 3.3. Lease assets and liabilities 61 3.4. Trade receivables 3.5. Contract assets and liabilities 3.6. Prepaid expenses 3.7. Provisions AGGAAGG 63 65 65 66 Nuuday Annual Report 2022 54#55nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.1 | Intangible assets (DKKm) Cost at 1 January Additions Additions related to acquisition of activities Assets disposed of or fully amortised Cost at 31 December 2022 Goodwill Customer relationships Other rights, Brands software, etc. Total Goodwill Customer relationships 2021 Brands: Other rights, software, etc. Total 9,255 14,328 4,175 8,670 891 36,428 891 9,255 14,334 4,175 8,705 733 36,469 733 51 51 (47) (412) 9,255 14,281 4,175 9,200 (459) 36,911 (6) 9,255 14,328 4,175 (768) 8,670 (774) 36,428 Amortisation and impairment losses at 1 January (3,693) (12,783) (123) Amortisation (245) Impairment losses for the year Assets disposed of or fully amortised 47 (6,913) (834) (14) 411 (23,512) (3,693) (1,079) (12,448) (341) (119) (6.828) (23,088) (4) (841) (1,186) (14) 458 (12) (12) 6 768 774 Amortisation and impairment losses at 31 December (3,693) (12,981) (123) (7,350) (24,147) (3,693) (12,783) (123) (6,913) (23,512) Carrying amount at 31 December Comments 5,562 1,300 4,052 1,850 12,764 5,562 1,545 4,052 1,757 12,916 In 2022, impairment losses of intangi- ble assets, etc. totalled DKK 14m, (2021: DKK 12m) of all related to termination of various software projects. Assets with indefinite useful lives other than goodwill related to the TDC brand were unchanged at DKK 4,052m compared with 2021. The carrying amount of software amounted to DKK 1,728m (2021: DKK 1,606m), of which DKK 87m related to software in process. The addition of internally developed software totalled DKK 454m (2021: DKK 445m). Nuuday Annual Report 2022 55 55#56nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.1 | Intangible assets (continued) AIA Critical accounting estimates and judgements Management estimates useful lives for intangible assets based on periodic stud- ies of customer churn or actual useful lives and the intended use for those assets. Such studies are completed or updated when new events occur that may have the potential to impact the determination of the useful life of the asset, i.e. when events or circumstances occur that indicate that the carrying amount of the asset may not be recov- erable and should therefore be tested for impairment. Any change in customer churn or the expected useful lives of these assets is recognised in the financial statements, as soon as any such change has been ascertained, as a change in a critical accounting estimate. Impairment testing of intangible assets Intangible assets comprise a significant portion of Nuuday Group's total assets. The measurement of the recoverable amount of intangible assets is a complex process that requires significant Man- agement judgements in determining vari- ous assumptions to be used to calculate cash-flow projections, discount rates and terminal growth rates. The sensitivity of changes in the assumptions used to determine the recoverable amount may be significant. Furthermore, the use of other estimates or assumptions when determining the recoverable amount of the assets may result in other values and could result in required impairment of intangible assets. The assumptions used for the impair- ment testing of goodwill are shown in the section Impairment testing of goodwill and intangible assets with indefinite useful lives. Impairment testing of goodwill and intangible assets with indefinite useful lives The carrying amount of goodwill is tested for impairment annually and if events or changes in circumstances indi- cate impairment. The annual tests were carried out at 1 October 2022 and at 1 October 2021, respectively. Impairment testing is an integral part of Nuuday's budget and planning process, which is based on long-term business plans with projection until 2030. The dis- count rates applied reflect specific risks relating to the individual cash-generating unit. The recoverable amount is based on the value in use determined on expected cash flows based on long-term business plans approved by Management. Projections for the terminal period are based on general expectations and risks, taking into account the general growth expectations for the telecoms industry in Denmark. The long-term business plans are based on current trends. The budget period includes cash flow effects from com- pleted restructurings combined with effects of strategic initiatives aimed at improving or maintaining trend lines. For the impairment testing of goodwill, Nuuday uses a pre-tax discount rate for each of the four cash-generating units. Sensitivity analyses have been per- formed to assess the probability that any likely changes in cash flow or dis- count rate will result in an impairment loss. One of the key swing factors behind the projection is the EBITDA level in the planning period. A sensitivity analysis indicates that EBITDA may be approxi- mately 10% lower in each year in the planning period before a write-down would have to be recognised. If the Key assumptions for calculating the value in use for the significant¹ goodwill amounts (DKKm) Carrying amount of goodwill at 31 December 2022 (DKKm) Carrying amount of goodwill at 31 December 2021 (DKKm) Market-based growth rate applied at 1 October 2022 to extrapolated projected future cash flows for the period following 2030 YouSee Nuubrands Business 3,603 3,603 1,030 1,030 895 895 2.3% 2.3% 2.3% Market-based growth rate applied at 1 October 2021 to extrapolated projected future cash flows for the period following 2030 1.0% 1.0% 1.0% Applied pre-tax discount rate at 1 October 2022 11.7% 11.7% 11.7% Applied pre-tax discount rate at 1 October 2021 7.6% 7.6% 7.6% 1 Representing 99% of the total carrying amount in 2022. Nuuday Annual Report 2022 56#57nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.1 | Intangible assets (continued) Weighted average cost of capital (WACC) applied as the discounting factor in the calculations increases/ decreases by 1.0% and all other things being equal, the value in use would de- crease/increase by DKK 1.7bn and 2.3bn, respectively and would not cause the carrying amount of goodwill to exceed the recoverable value. Under the same assumptions, a 1.0% decrease/increase in the market-based growth rate would the value in use decrease/increase by DKK 1.1bn and 1.5bn, respectively. All the above-mentioned changes in key as- sumptions would not cause the carrying amount to exceed the recoverable value. If the key assumptions change more than indicated in the above analyses the recoverable value may decrease at a level, where an impairment loss occurs. With the present relation between WACC and growth rate the WACC can increase to approximately 12.9% pre-tax with a growth rate at 2.5% before the carrying amount of goodwill will exceed the recoverable value. The assumptions for calculating the value in use for the most significant goodwill amounts are given below. Assumptions regarding recoverable amounts and projected earnings YouSee Any reasonably possible changes in the key assumptions are not expected to cause the carrying amount of goodwill to exceed the recoverable value. Projections are based on the assumption of a steadily declining EBITDA in the projected period. However, the trend towards the terminal period in the long- term business plan will stabilise based on the following assumptions: • Landline voice RGU will decline in line with market trends however partly offset by slightly increasing ARPU development due to price development in the market • A decline in mobility services gross profit from a slightly declining cus- tomer base, but offset by ARPU stabili- sation in line with general price devel- opment A minor decline in broadband gross profit due to decreasing RGUs on par- ticularly DSL, as customers migrate to high-speed technologies (e.g. fibre and coax). The decline will be partly offset by increasing ARPUS in the later years of the projected period driven by the customer migrations and general price development TV gross profit decline due to pressure on the number of RGUS from market trends. Focus on future-proof technol- ogy in TV such as "Bland selv TV", will somewhat stabilise the RGU trend in terminal period and generate higher ARPU . Savings throughout the first half of the planning period driven by initiatives generated in an extensive saving pro- gram with reductions in external and personnel expenses. Inflationary in- crease in cost assumed from halfway in the planning period. Nuubrands Any reasonably possible changes in the key assumptions are not expected to cause the carrying amount of goodwill to exceed the recoverable value. Projections are based on the assumption of steadily increasing EBITDA throughout the projected period in the long-term business plan based on the following as- sumptions: . • Steady growth in mobility services gross profit driven by increased foot- print in the no-frills market from Eesy. Furthermore, increasing ARPUs are ex- pected in line with the general price development to further improve the mobility gross profit development Increasing broadband gross profit driven by Hiper's increased footprint in the high-speed technology market Savings throughout the first half of the planning period driven by initiatives generated in an extensive saving pro- gram with reductions in external and personnel expenses. Inflationary in- crease in cost assumed from halfway in the planning period Business Any reasonably possible changes in the key assumptions are not expected to cause the carrying amount of goodwill to exceed the recoverable value. Projections are based on the assump- tions of a declining EBITDA early in the planning period, offset by a stabilization of EBITDA and subsequent increasing EBITDA towards the terminal period in the long-term business plan based on the following assumptions: • Landline voice RGU decline in line with market trend • • Stable gross profit development in mo- bility services throughout the planning period, driven by small increase in RGU base, offset by lower ARPU due to product mix and cost development Declining broadband GP in the early years of the planning period, however it will stabilise towards terminal period. The increase is driven by migrations of customers from DSL to high-speed technology (e.g. fibre) in the upcoming years, which drive high loss of RGUS and low ARPUS, but will eventually sta- bilise after migrations Savings throughout the first half of the planning period driven by initiatives. generated in an extensive saving pro- gram with reductions in external and personnel expenses. Inflationary in- crease in cost assumed from halfway in the planning period Nuuday Annual Report 2022 57#58nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.1 | Intangible assets (continued) § Accounting policies Goodwill and brands with indefinite use- ful lives are recognised at cost less accu- mulated impairment losses. The carrying amounts of goodwill and brands with indefinite useful lives are tested for impairment annually and whenever events or changes in circumstances indi- cate that the carrying amounts may not be recoverable, and are subsequently written down to the recoverable amounts in the income statement if exceeded by the carrying amounts. Impairment losses-of goodwill are not reversed. For the purpose of impairment testing in the consolidated financial statement, goodwill is allocated to the Group's cash-generating units. The determination of cash-generating units is based on the internal management reporting. Brands with finite useful lives, proprie- tary rights, etc. are measured at cost less accumulated amortisation and im- pairment losses and are amortised on a straight-line basis over their estimated Useful lives. Customer-related assets are measured at cost less accumulated amortisation and impairment losses and are amortised using the diminishing-balance method based on the percentage of churn (5% to 20%) corresponding to the expected pat- tern of consumption of the expected future economic benefits. Development projects, including costs of computer software purchased or devel- oped for internal use, are recognised as intangible assets if the cost can be cal- culated reliably and if they are expected to generate future financial benefits. Costs of development projects include wages, external charges, depreciation and amortisation that are directly at- tributable to the development activities as well as interest expenses in the pro- duction period. Development projects that do not meet the criteria for recognition in the bal- ance sheet are expensed as incurred in the income statement. The main amortisation periods are as follows: Software 3-5 years Development projects in process and intangible assets of indefinite useful lives are tested for impairment at least annu- ally and written down to recoverable amounts in the income statement if exceeded by the carrying amount. Intangible assets are recorded at the lower of recoverable amount and carry- ing amount. Impairment tests on goodwill and other intangible assets with indefinite lives are performed at least annually and, if nec- essary, when events or changes in cir- cumstances indicate that their carrying amounts may not be recoverable. Nuuday Annual Report 2022 58#59nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.2 | Property, plant and equipment (DKKm) Cost at 1 January Transfers (to)/from other items Transfers from leased assets Additions Assets disposed of Cost at 31 December 2022 2021 Network infra- structure Assets under Equipment construction Total Network infra- structure Assets under Equipment construction Total 2,400 12 725 86 (12) 3,211 2,471 698 58 3,227 6 6 288 46 51 385 280 42 28 350 (538) (538) (357) (15) (372) 2,162 771 125 3,058 2,400 725 86 3,211 Depreciation and impairment losses at 1 January (1,474) (593) (4) (2,071) (1,456) (543) Transfers from leased assets (4) Depreciation (319) (62) (381) (369) (65) Impairment losses for the year (2) 8༔༔8 (2) (2,001) (4) (434) (2) (4) Assets disposed of 538 538 Depreciation and impairment losses at 31 December (1,255) (655) (4) (1,914) 357 (1,474) 15 (593) (4) 372 (2,071) Carrying amount at 31 December 907 116 121 1,144 926 132 82 1,140 Cash flow (DKKm) Additions, cf. table above Non-cash additions regarding decommissioning obligations Capitalised depreciations cf. note 2.5 Cash flow from investment in property, plant and equipment 2022 2021 (385) (350) 2 10 9 (375) (339) Nuuday Annual Report 2022 59#60nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.2 | Property, plant and equipment (continued) § Accounting policies Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Cost comprises purchase price and costs directly attributable to the acquisition until the date on which the asset is ready for use. The cost of self-con- structed assets includes directly attributable payroll costs, materials, depreciation, parts purchased and services rendered by sub-suppliers or contractors as well as interest expenses in the construction period. Cost also includes estimated decommissioning costs if the related obligation meets the conditions for recognition as a provision. Directly attributable costs comprise personnel expenses together with other external expenses calculated in terms of time spent on self-constructed assets. The depreciation base is measured at cost less residual value and any impair- ment losses. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets. The main depreciation periods are as shown in the next table. Network infrastructure: exchange equipment other network equipment 3-15 years 3-20 years Equipment (computers, tools and office equipment) 3-15 years The useful lives and residual values of the assets are reviewed regularly. If the residual value exceeds the carrying amount of an asset, depreciation is dis- continued. Property, plant and equipment that have been disposed of or scrapped are elimi- nated from accumulated cost and accu- mulated depreciation. Gains and losses arising from sale of property, plant and equipment are measured as the differ- ence between the sales price less selling expenses and the carrying amount at the time of sale. The resulting gain or loss is recognised in the income state- ment under other income or other expenses. Software that is an integral part of tele- phone exchange installations, for exam- ple, is presented together with the related assets. Useful lives are estimated individually. Customer-placed equipment (e.g. set- top boxes) is capitalised and depreciated over the estimated useful life of the indi- vidual asset, not exceeding five years. Nuuday Annual Report 2022 60#61nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.3 | Lease assets and liabilities Lease assets (DKKm) Carrying amount at 1 January Additions Transfer to property, plant and equipment Disposals Depreciation Carrying amount at 31 December Amounts recognised in the income statement (DKKm) Expense relating to short-term leases Depreciation charge of lease assets, cf. above Interest expense (included in financing costs) 2022 Network Land and buildings infrastructure 344 12 (61) 295 OO 2021 Vehicles and equipment Total Land and buildings Network infrastructure 2022 2021 Vehicles and equipment Total 34 378 372 2 38 412 26 38 44 21 65 (2) (2) - (4) (4) (11) (1) (12) (24) (85) (61) (24) (85) 32 327 344 0 34 378 Lease liabilities (DKKm) (29) (24) (85) (85) Recognised in the balance sheet at present value: External lease liabilities (10) (11) Lease liabilities due to group companies Total Of which presented as current Total non-current 2022 2021 15 4 342 395 357 399 (83) (82) 274 317 Comments Nuuday leases various offices, retail stores, vehicles and equipment. Rental contracts are typically made for fixed periods of 3 to 15 years but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and condi- tions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. Maturing between 1 and 3 years Maturing between 3 and 5 years Maturing between 5 and 10 years Total non-current 141 138 63 89 70 90 274 317 Reconciliation of lease liabilities (DKKm) 2022 2021 Carrying amount at 1 January Lease payments 399 426 (75) (79) 39 65 (6) (13) 357 399 New lease contracts Other non-cash movements Carrying amount at 31 December Nuuday Annual Report 2022 61#62nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.3 | Lease assets and liabilities (continued) § Accounting policies Comments The total cash outflow for leases in 2022 totalled DKK 85m (2021: DKK 90m). The amount is excl. short-term leases and leases of low-value assets. Assets and liabilities arising from leases are initially measured on a present-value basis. Lease liabilities include the net pre- sent value of the following lease pay- ments: • fixed payments (including in-substance fixed payments), less any lease incen- tives receivable ⚫ variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the commencement date • amounts expected to be payable by the Group under residual value guar- antees ⚫the exercise price of a purchase option if the Group is reasonably certain to exercise that option . payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. Lease payments to be made under rea- sonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee's incremental bor- rowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the lease asset in a similar economic environment with similar terms, security and conditions. The incremental borrowing rates are based on our existing credit facilities and observable market data. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the lease asset. Lease payments are allocated between principal and financing costs. The financ- ing costs are charged to the income statement over the lease period so as to produce a constant periodic rate of in- terest on the remaining balance of the li- ability for each period. Lease assets are measured at cost less accumulated depreciation and write- downs for impairment. Cost comprises the following: ⚫ the amount of the initial measurement of lease liability ⚫ any lease payments made at or before the commencement date less any lease incentives received ⚫any initial direct costs • decommissioning costs. Lease assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the lease asset is depreciated over the underlying asset's useful life cf. note 3.2. Impairment tests on lease assets are performed annually and, if necessary, when circumstances indicate their car- rying amounts may not be recoverable. Write-downs of lease assets related to vacant tenancies are based on expecta- tions concerning timing and scope, future cost levels etc. The calculation of the write-downs comprises rent and operating costs for the contract period reduced by the expected rental income from subleases. Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are expensed as incurred. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture. Nuuday Annual Report 2022 62 42#63nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.4 Trade receivables (DKKm) Trade receivables Expected credit losses. Trade receivables, net Expected credit losses at 1 January Expected credit loss recognised Realised credit losses Reversed expected credit losses Expected credit losses at 31 December Trade receivables (DKKm) 2022 Expected loss rate Gross carrying amount Expected credit losses 2021 2022 2021 1,226 1,213 (94) (167) 1,132 1,046 (167) (181) (51) (35) 99 33 25 16 (94) (167) Comments The carrying amount of the balance's approximated fair value is due to the short maturity of amounts receivable. As at 1 January 2021, trade receiva- bles from contracts with customers amounted to DKK 1,117m (net of loss allowance of DKK 181m). Less than More than More than More than Not yet due 1 month past due 1 month past due 3 months past due 6 months past due Total 2% 1% 3% 17% 77% 897 151 62 23 93 8% 1,226 (15) (1) (2) (4) (72) (94) Expected loss rate 1% 1% 4% 11% 75% Gross carrying amount 779 145 50 37 202 14% 1,213 Expected credit losses (7) (2) (2) (4) (152) (167) AA Critical accounting estimates Expected credit losses are assessed for portfolios of trade receivables based on customer segments, historical credit loss experience combined with forward-look- ing information on macroeconomic factors affecting the credit risk. The expected loss rates are updated at each reporting date. Nuuday Annual Report 2022 63#64nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.4 | Trade receivables (continued) § Accounting policies Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Nuuday operates with stand- ard customer payment terms where customer subscriptions are billed and paid in advance of the subscription period, while usage and one-off services are billed and paid after the subscription period. The receivables are generally due for settlement within 20-30 days and are therefore all classified as cur- rent. Trade receivables are recognised initially at the amount of consideration that is unconditional. The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subse- quently at amortised cost using the effective interest method. Nuuday applies the simplified approach to measure expected credit losses, which uses a lifetime expected loss allowance for all trade receivables, contract assets and lease receivables. To measure the expected credit losses, receivables have been grouped based on shared credit risk characteristics and the days past due. The expected loss rates are based on the payment profiles of sales and the corresponding historical credit losses experienced. The historical loss rates are adjusted to reflect current and forward- looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Nuuday Annual Report 2022 64#65nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.5 | Contract assets and liabilities 3.6 | Prepaid expenses (DKKm) 2022 2021 1 January 2021 § Assets recognised from costs to obtain a contract (SAC) 248 204 Assets recognised from costs to fulfil a contract 55 23 Assets recognised from costs to fulfil contracts with Group companies Total contract assets 212 14 373 335 676 562 263 489 Deferred subscription income 2,191 2,150 2,149 Work in progress for the account of third parties, liabilities 5 17 Total contract liabilities 2,196 2,167 2,194 Comments Of the deferred subscription income, DKK 30m (2021: DKK 38m) will be rec- ognised as income after more than one year. Revenue recognised in 2022 that was included in deferred subscription income at the beginning of the period amounted to DKK 2,108m (2021: DKK 2,102m). Costs recognised in 2022 that were included in assets recognised from costs to obtain a contract (SAC) at the beginning of the period amounted to DKK 123m (2021: DKK 132m). Assets to fulfil a contract at the beginning of the period DKK 86m (2021 DKK 61m) were recog- nised as costs in 2022. Of the assets recognised from costs to obtain a contract (SAC), DKK 108m (2021 DKK 82m) and DKK 314m (2021: DKK 269m) of costs to fulfil a contract will be recognised as costs after more than one year. 45 Accounting policies Subscriber acquisition costs and fulfilment costs The most common subscriber acquisition costs are dealer commissions. Subscriber acquisition costs and fulfilment costs are capitalised and recognised as expenses in external expenses and personnel expenses over the expected term of the related customer relationship. The term is estimated using historical customer churn rates. Change of management estimates may have a significant impact on the amount and timing of the expenses for any period. Deferred subscription income recognised as a liability comprises payments re- ceived from customers covering income in subsequent years. Comments Total prepaid expenses amounted to DKK 636m (2021: DKK 607m) of which DKK 269m (2021: DKK 280m) related to group companies. Nuuday Annual Report 2022 65#66nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements .......... 3.7 | Provisions (DKKm) Restructuring obligations 2022 Other provisions Provisions at 1 January Provisions made Provisions used (payments) 50 55 105 54 (72) (1) Reversal of unused provisio (11) Provisions at 31 December 32 43 Of which recognised through special items in the income statement 30 2 BER ✖ 54 (73) (11) 75 105 Recognised as follows in the balance sheet: Non-current liabilities 6 13 43 49 61 Current liabilities Total 26 26 44 32 43 75 105 Specification of how payments regarding provisions are recognised in the statements of cash flow (DKKm) Payments related to provisions Cash flow related to special items Total Total 2021 80 135 (102) (8) 53 2022 2021 (7) (66) (73) (12) (90) (102) Comments Provisions for restructuring obli- gations related primarily to redun- dancy programmes. The majority of the provisions for redundancy programmes are expected to result in cash outflows in the next five years. The uncertainties related primarily to the estimated amounts and the timing of the related cash outflows. Other provisions related mainly to onerous contracts and jubilee benefits for employees as well as decommissioning obligations. The majority of these provisions are not expected to result in cash outflows in the next five years. The uncertainties regarding oner- ous contracts related to both tim- ing and estimated amounts. The uncertainties regarding jubilee benefits related to both salary and the number of employees included. Nuuday's total redundancy costs included wages during the notice period, severance pay, stand-off pay, payments pursuant to the Danish Salaried Employees Act, social security contributions and outplacement costs. § Accounting policies Provisions are recognised when the Group has a legal or constructive obliga- tion arising from past events, it is proba- ble that economic benefits must be sacrificed to settle it, and the amount can be estimated reliably. Provisions for restructuring, etc. are recognised when a final decision thereon has been made before or on the balance sheet date and has been announced to the parties involved, provided that the amount can be measured reliably. Provi- sions for restructuring are based on a defined plan, which means that the restructuring commences immediately after the decision has been made. Provisions are measured at Manage- ment's best estimate of the amount at which the liability is expected to be set- tled. Provisions are discounted if the effect is material to the measurement of the liability. Nuuday Annual Report 2022 66#67nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 4 Capital structure and financing costs This section includes disclosures related to Nuuday's capital structure and related financing costs as well as finance- related risks and how these are managed. In this section 4.1. Equity 4.2. Loans 4.3. 4.4. Financial risks Financial income and expenses 68 69 70 RAN 71 4.5. Maturity profiles of financial instruments 72 Nuuday Annual Report 2022 40 67#68nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.1 Equity Comments The total authorised number of shares is 400,200 with a par value of DKK 1 per share (increased 100 in 2022 compared to 2021). All issued shares are fully paid up. During 2022, total equity increased by DKK 6,157m to DKK 6,543m due to equity contribution (DKK 6,347m) offset by the loss for the year (DKK 190m). During 2021, total equity decreased by DKK 390m to DKK 386m due to the loss for the year. The parent company statement of changes in equity specifies which reserves are available for distribu- tion. The distributable reserves amounted to DKK 5,208m at 31 December 2022 (2021: DKK (707)m). At the Annual General Meeting, the Board of Directors will not propose any dividend for the financial year 2022. § Accounting policies Dividends Dividends expected to be distributed for the year are recognised in a separate item in equity. Dividends and interim divi- dends are recognised as a liability at the time of adoption by the Annual General Meeting and the meeting of the Board of Directors, respectively. Nuuday Annual Report 2022 68#69nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.2 Loans Accounting policies Comments At year-end 2022 Nuuday was financed by a shareholder loan from TDC Holding A/S and a Re- volving Credit Facility provided by external banks. In December 2022 the shareholder loan was reduced from DKK 9 bn to DKK 2.9bn by converting the residual to equity. In November 2022, Nuuday signed a new term loan facility, where proceeds will be used to redeem the loan (including accrued inter- est) from TDC Holding A/S. Events after the balance sheet date On 3 February 2023, Nuuday is- sued a EUR 500m term loan, In connec- tion with the DKT Finance refi- nancing in February 2023, Nuuday redeemed it's loan from TDC Holding A/S. Together with the re- volving credit facility the new term loan completes the long term funding of Nuuday. The establishment of the new share and capital structure sup- ports the strategy and the long- term value creation in the interest of the company as well as the shareholders. Loan from TDC Holding A/S Maturity Fixed/floating rate Coupon Currency Nominal value (DKKm) Additionally, Nuuday has entered into EUR 450m notional interest rate swaps to hedge future debt issuance. As of 31-12 2022 there were no drawings on Revolving Credit Facilities (RCF). Undrawn RCFS amount to EUR 13m, maturing July 2026. Reconciliation of loans (DKKm) 2030 Dec 2030 Fixed 4% DKK 2,873 7,453 2,873 1,547 2,873 9,000 Loans Loans are recognised initially at the proceeds received net of transaction expenses incurred. In subsequent peri- ods, loans are measured at amortised cost so that the difference between the proceeds and the nominal value is recog- nised in the income statement over the term of the loan. Other financial liabilities are measured at amortised cost. Financial instruments On initial recognition, financial deriva- tives are recognised in the balance sheet at fair value and subsequently remeas- ured at fair value in the balance sheet and in the income statement. Depending on the type of instrument, different rec- ognised measurement methods are ap- plied for derivative financial instruments. Nuuday does not apply hedge account- ing. 2022 2021 Carrying amount at 1 January 9,000 9,000 Conversion of loan from TDC Holding A/S to share capital (6,127) Carrying amount at 31. December 2,873 9,000 Recognised as follows in the balance sheet: Non-current liabilities Current liabilities Total Nuuday Annual Report 2022 69#70nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.3 | Financial risks Comments Nuuday is exposed to financial market and credit risks when buy- ing and selling goods and services denominated in foreign currencies as well as due to the cash flow from investing in the business and financing activities. Nuuday han- dles financial risks specific to the provision of digital customer expe- riences and entertainment, and is supported by the Group Treasury function in relation to identifying, monitoring and managing these risks (see also the Group Treas- ury's financial policies for risk management in TDC Holding group's Annual Report). Interest-rate risks Nuuday is exposed to interest-rate risks in the euro area. This risk emerges as the Revolving Credit Facility (RCF) is tied to the development in the daily European reference rate, Euribor. The new term loan facility, which ensures Nuuday's long term funding, has been hedged before drawing the loan pro- ceeds. Therefore, Nuuday has mitigated the main interest rate risk in the funding structure. Exchange-rate risks Nuuday is primarily exposed to ex- change-rate risks from USD, but these are hedged by TDCH's Group Treasury function. These risks relate to payables from equipment and handset suppliers as well as content providers. Nuuday has no exchange-rate risk from its shareholder loan or the new term loan facility as they are issued in DKK and EUR respectively. Credit risks Nuuday is exposed to credit risks as a provider of digital customer experiences and entertainment in Denmark and as counterparty to financial contracts. Nuuday handles the credit risk emanat- ing from providing services for custom- ers, while the credit risks in relation to fi- nancial contracts are handled centrally by TDCH's Group Treasury function. Liquidity risks Nuuday has no short-term refinancing risk as the new term loan facility is run- ning for five years. Undrawn credit lines At year-end 2022, Nuuday had undrawn committed credit lines totalling DKK 1,004m. Credit rating In relation to the 2022 financing, Nuuday has been rated by the three global rat- ing agencies Moody's, Fitch and S&P. All ratings are listed in the below table. Nuuday ratings at 31 December 2022 Nuuday Moody's Fitch S&P Company Instrument Company Instrument Company Instrument B2 B2 B (neg outlook) BB- B- B Nuuday Annual Report 2022 70#71nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.4 | Financial income and expenses (DKKm) Interest income Interest expenses Net interest Specified as follows: Loans from TDC Holding A/S Lease liability Other Currency translation adjustments Fair Value adjustments' Interest and currency translation adjustments Profit/(loss) from joint ventures and associates Total 1 Nuuday has partly hedged its future debt issuances to fixed. interest rates (nominal EUR 450m), and as market interest rates have increased this has resulted in a gain in 2022. 2022 2021 13 6 (417) (449) (404) (443) (360) (355) (10) (11) (34) (77) (1) (6) 85 (320) (449) 49 (320) (400) Nuuday Annual Report 2022 71#72nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.5 | Maturity profiles of financial instruments Maturity profiles of expected cash flows (DKKm) Financial assets and liabilities measured at fair value through profit or loss Assets²: Derivatives Inflow Outflow Total derivatives assets Liabilities: Derivatives Inflow Outflow Total derivatives liabilities Total derivatives 2022 < 1 year 1-3 years 3-5 years > 5 years Total Fair value Carrying amount 882 34 155 189 (19) (69) (88) 15 86 101) 97 97 278 (289) (11) 4 86 278 (289) (11) (11) (11) (90 86 86 Financial liabilities measured at amortised cost Loan from TDC Holding A/S (2,873) (2,873) (2,873) (2,873) Loan from TDC Holding A/S, interest³ (125) (125) (107) (107) Lease liability (84) (149) (71) (84) (388) (357) (357) Amounts owed to group companies (983) (983) (983) (983) Trade and other payables4 Total (1,022) (5,087) (1,022) (1,022) (1,022) (149) (71) (84) (5,391) (5,342) (5,342) Total (5,083) (63) (71) (84) (5,301) (5,256) (5,256) Maturity profiles The maturity analyses of financial assets and liabilities are disclosed by category and class and are allocated according to maturity period. All interest payments and repayments of financial liabilities are based on contractual agreements. Inter- est payments on floating-rate instru- ments are determined using forward rates. Financial assets and liabilities measured at fair value relate to derivatives. The fair value of these derivatives is calcu- lated based on observable inputs such as interest rates, etc. (Level 2 in the IFRS fair value hierarchy). Nuuday Annual Report 2022 72#73nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.5 | Maturity profiles of financial instruments (continued) 2021 Maturity profiles of expected cash flows (DKKm) < 1 year 1-3 years 3-5 years > 5 years Total Fair value Carrying amount Financial liabilities measured at amortised cost Loan from TDC Holding A/S Loan from TDC Holding A/S, interest³ Lease liability Amounts owed to group companies Trade and other payables4 Total (1,547) (355) (83) (1,247) (975) (1,573) (455) (147) (5,880) (176) (99) (109) (9,000) (986) (438) (1,247) (975) (9,000) (9,000) (231) (399) (1,247) (975) (231) (399) (1,247) (975) (4,207) (2,175) (6,155) (109) (12,646) (11,852) (11,852) 1 All cash flows are undiscounted. The table reflects only the cash flow from financial liabilities. 2 Both assets and liabilities measured at fair value through profit or loss are disclosed in the above table because some of the derivatives are used for hedging financial liabilities measured at amortised cost, see table. 3 Fair value and carrying amount value consist of accrued interest on loan from TDC Holding A/S at 31 December 4 As not all trade and other payables recognised in the balance sheet are financial instruments (e.g. unbilled payables do not constitute a financial liability), the amount differs from the amount disclosed in the balance sheet. Nuuday Annual Report 2022 73#74nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 5 Cash flow This section provides information on Nuuday's cash flow. More information on development in the cash flow items is included in note 2.6 Special items, note 3.1 Intangible assets, note 3.2 Property, plant and equipment, note 3.3 Lease assets and liabilities, note 3.7 Provisions as well as note 4.4 Financial income and expenses. A review of cash flow is provided in the section Nuuday performance in the Management's review. In this section 5.1. Change in working capital 5.2. Investment in enterprises 75 75 Nuuday Annual Report 2022 74#75nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements § Accounting policies Cash flow from operating activities is presented using the indirect method and is based on profit before interest, taxes, depreciation, amortisation and special items adjusted for non-cash operating items, cash flow related to special items, changes in working capital, interest received and paid as well as income taxes paid. Cash flow from investing activities comprises acquisitions and divestments of enterprises, purchases and sales of intangible assets, property, plant and equipment as well as other non-current assets. Cash flow from acquired enter- prises are recognised from the time of acquisition, while cash flows from enter- prises divested are recognised up to the time of divestment. Cash flow from financing activities com- prises changes in interest-bearing debt, lease instalments and dividends to share- holders. Cash and cash equivalents cover cash and marketable securities with a remain- ing life not exceeding three months at the time of acquisition, and with an insig- nificant risk of changes in value. The cash flow statement cannot be derived solely from information pre- sented in the financial statements. 5.1 Change in working capital (DKKm) Change in inventories Change in receivables Change in contract assets Change in trade payables Change in contract liabilities Change in prepaid expenses Change in other items, net Total 5.2 Investment in enterprises In 2022, Nuuday insourced IT- and other activities from the parent company TDC Holding A/S. The net cash flow on the acquisition amounted to DKK 51m. The acquisition had no significant impact on the income statement for 2022. 2022 2021 (35) (52) (85) 199 (114) (73) (187) 914 29 (27) 5 (53) (25) (412) (95) 813 Nuuday Annual Report 2022 75#76nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Section 6 Other disclosures This section contains statutory notes or notes that are presumed to be less important for understanding the Group's financial performance. In this section 6.1. Incentive programmes 77 6.2. Related parties 78 6.3. Fees to auditors 79 6.4. Other financial commitments 79 6.5. Pledges and contingencies 80 6.6. Events after the balance sheet date 6.7. Overview of group companies at 31 December 2022 000 80 80 Nuuday Annual Report 2022 76#77nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 6.1| Incentive programmes In order to support the delivery of short- and long-term financial results, the Group has both short- and long-term in- centive programmes for executives and managers. Short-term incentive programmes (STI) The short-term bonus programmes are closely linked to our strategy. The per- formance measures are focused on EBITDA, dividend capacity and Net Pro- moter Score. Bonus payments are calculated as the individual employee's basic salary multi- plied by the bonus percentage multiplied by the degree of target fulfilment. The bonus percentage for members of the Executive Committee is usually 25-50%. For other managers, the bonus percentage varies within a range of 10%- 33%. The target fulfilment can be maxi- mum 200%. Long-Term Incentive programme (LTI) The LTI programme is cash based and its objectives are linked to the long-term strategy. The programme is revolving with grants given each year but with a 2 or 3-year vesting period, as the goals are principally set for a 2 or 3-year period. The objectives are EBITDA, cash flow, fibre connection performance, divi- dend capacity and Net Promoter Score. The expenses are recognised over the vesting period. Bonus payments are calculated as the individual employee's basic salary multi- plied by a LTI percentage multiplied by the degree of target fulfilment. The LTI percentage usually varies within a range of 12%-36%. The target fulfilment can be maximum 200%. Management incentive programme (MIP) In July 2020, the parent company TDC Holding A/S established a new cash- based incentive programme which in- cludes the Executive Committee and certain key managers of Nuuday. In total 15 managers are participating the MIP programme. Under the MIP, the partici- pants are required to place a deposit to TDC Holding A/S to qualify for a return. The payback amounts are based on the development in certain financial perfor- mance measures of the TDC Holding group as well as certain business and Health & Safety KPIs over the period un- til 2023. The investment programme co- vers the time period 2019-2023. The par- ticipants have 40% of the deposits at risk of being lost in downside scenarios and the expected range of payouts are at 2x-4x the participants' deposit. The Nuuday participants' total deposits amount to DKK 13m and the expenses for 2022 relating to the programme amounted to DKK 11m (2021: DKK 2m). At 31 December 2022 the total liabilities re- lated to the management incentive pro- gramme amounted to DKK 30m (2021: DKK 18m) Nuuday Annual Report 2022 77#78nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 6.2 | Related parties Name of related party Nature of relationship Domicile Related parties (DKKm) 2022 2021 DKT Holdings ApS DKT Finance ApS Indirect ownership - ultimate parent Indirect ownership Copenhagen, Denmark Copenhagen, Denmark TDC Holding A/S Income 2 26 DK Telekommunikation ApS Indirect ownership Copenhagen, Denmark Expenses, lease payments and capital expenditures (560) (757) TDC Holding A/S TDC NET A/S TDC Pensionskasse Ownership parent Copenhagen, Denmark Receivables Subsidiary of TDC Holding A/S Pension fund Copenhagen, Denmark Copenhagen, Denmark Payables (423) 865 (813) Loans (2,873) (9,000) Related parties also include Nuuday's joint ventures and associates shown in note 6.7. Remuneration for the Board of Directors and the Executive Committee is specified in note 2.4. Loans from the parent company TDC Holding A/S are specified in note 4.2. Purchase commitments towards group companies are shown in note 6.4. All transactions with related parties are made on market terms. The most signifi- cant related party is TDC NET A/S, see also note 2.2. Nuuday has the following additional transactions and outstanding balances with related parties: Joint ventures and associates Income Other related parties Income 98 Expenses and capital expenditures Receivables Payables (5,393) 269 90 (5,389) 280 (1,008) (1,059) Nuuday Annual Report 2022 78#79nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 6.3 | Fees to auditors Fees to auditors elected by the Annual General Meeting (DKKm) 2022 Statutory audit 3 Other assurance engagements Tax advisory services Other services Total non-statutory audit services Total 6.4 Other financial commitments 2021 (DKKm) 2022 2021 2 Lease commitments for short-term and low-value leases Short-term leases 13 10 1 Leases of low-value assets Total 13 10 5 1 6 1 Capital and purchase commitments Commitments related to infrastructure, IT and administrative services from 9 3 group companies 13,365 16,452 Commitments related to outsourcing agreements 200 Investments in intangible assets 398 Other purchase commitments 954 1,356 Comments The commitments related to infrastructure are preliminary contracts with TDC NET A/S. Except for short-term leases and leases of low-value assets, leases are recognised as a lease asset and a corresponding liability at the date at which the leased asset is available for use by the Group, cf. note 3.3. Nuuday Annual Report 2022 79#80nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 6.5 | Pledges and contingencies 6.6 Events after the balance sheet date 6.7 Overview of group companies at 31 December 2022 Pledges Cash with a carrying amount of DKK 402m are pledged as security for long-term loans. Contingent liabilities Nuuday is party to certain pending lawsuits and cases pending with public authorities and complaints boards. Based on a legal assessment of the possible outcome of each of these lawsuits and cases, Management is of the opinion that these will have no significant adverse effect on Nuuday's financial position. Until 31 December 2022, Nuuday A/S was jointly registered for Danish VAT with the parent company TDC Holding A/S and the majority of its Danish subsidiar- ies and is jointly and severally liable for payment of VAT. Nuuday A/S is liable for obligations at- tributable to the activities, assets and li- abilities of TDC Holding A/S that existed at the demerger on 11 June 2019. The joint and several liabilities of Nuuday A/S and TDC Holding A/S respectively may not exceed an amount corresponding to the net value of the assets and liabilities. In connection with the DKT Finance refi- nancing in February 2023, Nuuday re- deemed it's shareholder loan from TDC Holding A/S. Together with the revolving credit facility the new term loan com- pletes the long term funding of Nuuday. There have been no other events that materially affect the assessment of this Annual Report 2022 after the balance sheet date and up to today. Company name Hiper A/S TDC Telco ApS 4T af 1. oktober 2012 ApS¹ 1 The enterprise is included under the equity method. Domicile Currency Copenhagen, Denmark Taastrup, Denmark Copenhagen, Denmark DKK DKK DKK Ownership share (%) 100 100 25 Nuuday Annual Report 2022 80#81nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Parent company financial statements 2022 81#82nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Parent company income statement (DKKm) Revenue Cost of goods sold External expenses Personnel expenses Other income Operating profit before depreciation, amortisation and special items (EBITDA) Depreciation, amortisation and impairment losses Special items Operating profit/(loss) (EBIT) Loss from subsidiaries Financial income and expenses Loss before income taxes Income taxes Loss for the year Parent company statement of comprehensive income Note 2022 2021 (DKKm) 21 2.1 14,447 14,488 Loss for the year (9,647) (9,549) (1,446) (1,499) Other comprehensive income 2.2 (1,694) 65 (1,676) 58 Total comprehensive Loss 1,725 (1,527) 1,822 (1,687) 2.3 (66) (127) 132 8 3.4 (33) (21) 4.3 (317) (397) (218) (410) 2.4 28 20 (190) (390) Note 2022 2021 (190) (390) (190) (390) Nuuday Annual Report 2022 82#83nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Parent company balance sheet Assets (DKKM) Non-current assets Intangible assets Note 2022 2021 Equity and liabilities (DKKm) Note 2022 2021 Equity 3.1 12,274 12,420 Share capital Property, plant and equipment 3.2 1,121 1,125 Other reserves Lease assets 3.3 324 373 Retained earnings Investments in subsidiaries 3.4 645 678 Total equity 4.1 1,335 1,093 5,208 (707) 6,543 386 Investments in associates and joint ventures 3 3 Other receivables 11 13 Non-current liabilities Prepaid expenses 8 Deferred tax liabilities. 2.4 1,553 1,586 Total non-current assets 14,386 14,612 Provisions 48 Loans 4.2 61 7,453 Current assets Lease liabilities 3.3 272 314 Inventories Trade receivables 3.5 244 1,129 209 Other payables 214 205 1,044 Total non-current liabilities 2,087 9,619 Contract assets 3.6 616 529 Receivables from group companies 74 660 Current liabilities Other receivables 8 9 Loans group companies Income tax receivables 2.4 21 Lease liabilities Derivatives financial instruments 97 Trade payables Prepaid expenses 629 607 Contract liabilities Cash Total current assets 402 3,199 2 Payables to group companies 3,081 Income tax payable Other payables Total assets 17,585 17,693 Derivatives financial instruments. Provisions Total current liabilities 2,873 1,547 3.3 81 81 1,664 1,703 3.6 2,173 2,150 1,305 1,474 5 817 689 11 26 44 8,955 7,688 Total liabilities 11,042 17,307 Total equity and liabilities 17,585 17,693 Nuuday Annual Report 2022 83#84nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Parent company statement of cash flows (DKKm) Note 2022 2021 (DKKm) Note 2022 2021 Operating activities Operating profit before depreciation, amortisation and special items (EBITDA) Adjustment for non-cash items Financing activities 1,725 16 1,822 Lease payments Cost related to long-term loans 48 Change in interest-bearing receivables and payables Payments related to provisions (7) (12) Total cash flow from financing activities (74) (79) (35) 856 (902) 747 (981) Special items (76) (111) Change in working capital 5.1 (440) 621 Total cash flow 398 2 Interest received Interest paid 13 (308) 5 Cash and cash equivalents at 1 January 2 (436) Effect of exchange-rate changes on cash and cash equivalents 2 Income tax paid 2.4 21 19 Cash and cash equivalents at 31 December 402 2 Total cash flow from operating activities 944 1,956 Investing activities Investment in subsidiaries 3.4 (20) Investment in activities (51) Investment in property, plant and equipment (361) (328) Investment in intangible assets (883) (727) Investment in other non-current assets (4) Divestment of joint ventures and associates 97 Sale of other non-current assets 2 1 Change in loans to subsidiaries, joint ventures and associates 8 Total cash flow from investing activities (1,293) (973) Nuuday Annual Report 2022 84#85nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Parent company statement of changes in equity (DKKm) Equity at 1 January 2021 Loss for the year Total comprehensive income/(loss) Total transactions with owners. Equity at 31 December 2021 Loss for the year Total comprehensive income/(loss) Contributions of equity Total transactions with owners Equity at 31 December 2022 Reserve for capitalised Share capital development projects Retained earnings Total 948 (172) 776 145 (535) (390) 0 145 (535) (390) о 00 о 1,093 (707) 386 242 (432) (190) 242 (432) (190) 6,347 6,347 6,347 6,347 1,335 5,208 6,543 Nuuday Annual Report 2022 85#86nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Notes to parent company financial statements Nuuday Annual Report 2022 86 88#87nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 1.1 | Accounting policies 1.2 | Critical accounting estimates and judgements The Financial statements 2022 of the parent company have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and further disclosure requirements in the Danish Financial Statements Act (report- ing class "C stor"). The parent company accounting policies are the same as those applied for the Group, with the additions mentioned below. See note 1.1 to the consolidated financial statements for the Group's accounting policies. The accounting policies are unchanged compared with the policies applied in the Annual Report 2021. Supplementary accounting policies for the parent company Investments in subsidiaries, joint ventures and associates The equity method is used for measuring investments in subsidiaries, joint ventures and associates. Under the equity method, investments in a subsidiary, a joint venture or an associate are recog- nised on initial recognition at cost, and the carrying amount is increased or decreased to recognise the parent com- pany's share of the profit or loss of the investment after the date of acquisition. The parent company's share of profit or loss is recognised in the parent com- pany's profit or loss. Dividends received from investments in subsidiaries, joint ventures and associates reduce the carrying amount of the investment. The parent company's share of other com- prehensive income arising from the investment is recognised in other comprehensive income of the parent company. Reserve for capitalised development projects In accordance with the Danish Financial Statements Act, the parent company has established a non-distributable reserve in equity regarding capitalised development projects. This reserve will be reversed as the development projects are amortised or impaired. For information on critical accounting estimates and judgements, see note 1.2 to the consolidated financial statements. 1.3 | New accounting standards For information on new accounting standards for the Group, see note 1.3 to the consolidated financial statements. Nuuday Annual Report 2022 87#88nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.1| Revenue (DKKm) 2.2 Personnel expenses 2022 2021 (DKKm) 2022 2021 Sales of goods recognised at a point in time Sales of services recognised over time Total 1,394 13,053 1,364 Wages and salaries (including short-term and long-term bonus) Pensions (1,934) (1,926) (180) (175) 13,124 Social security (42) 14,447 14,488 Total (2,156) (36) (2,137) Revenue specified by services (DKKm) 2022 2021 Of which capitalised as non-current assets Total Landline voice Mobility services Internet & network TV Other services Total 462 (1,694) 461 (1,676) 3,321 3,431 746 806 Average number of full-time employee equivalents' 5,085 4,908 3,232 3,298 1 Denotes the average number of full-time employee equivalents including permanent employees and trainees. 3,452 3,438 1,932 14,447 2,038 14,488 Remuneration for the Board of Directors and the Executive Committee is described in note 2.4 to the consolidated financial statements. 2.3 Special items (DKKm) Costs related to redundancy programmes Other restructuring costs, etc. Loss from rulings Special items before income taxes Income taxes related to special items Special items related to joint ventures and associates Total special items 2022 2021 (49) (103) (15) (8) (2) (16) (66) (127) 14 27 49 (52) (51) Nuuday Annual Report 2022 88#89nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 2.4 Income taxes (DKKm) At 1 January Income taxes Adjustment of tax for previous years Tax paid Total Income taxes are specified as follows: Income excluding special items Special items Total 2022 2021 Income tax income/ (expense) Income tax Deferred tax payable/ (receivable) liabilities/ (assets) Income tax income/ (expense) Income tax payable/ (receivable). Deferred tax liabilities/ (assets) (21) 1,586 (58) 1,624 13 15 35 8 (21) 29 (3) (12) 88 24 (53) (9) (6) 15 28 25 21 19 1,553 20 (21) 1,586 14 14 28 (7) 27 20 Effective tax rate ( 2022 2021 Deferred tax (DKKm) 2022 2021 Danish corporate income tax rate 22.0 22.0 Intangible assets Profit from subsidiaries, joint ventures and associates (4.6) (1.5) Other Adjustment of tax for previous years 9.7 (2.6) Current 42 64 41 31 83 95 Limitation on the tax deductibility of interest expenses Other (22.0) (19.8) 4.1 (0.1) Intangible assets. 1,441 1,454 Effective tax rate excluding special items 9.2 (2.0) Property, plant and equipment (25) (5) Special items 3.6 6.9 Lease assets and liabilities (6) (4) Effective tax rate including special items 12.8 4.9 Other 60 46 Non-current 1,470 1,491 Deferred tax at 31 December 1,553 1,586 Nuuday Annual Report 2022 89#90nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 3.1 | Intangible assets (DKKm) Cost at 1 January Additions Additions related to acquisition of activities Assets disposed of or fully amortised Cost at 31 December Goodwill Customer relationships 2022 Other rights, Brands software, etc. Total Goodwill Customer relationships 2021 Brands: Other rights, software, etc. Total 8,815 14,345 4,162 8,642 883 51 35,964 883 51 8,815 14,351 4,162 8,683 727 36,011 727 8,815 (146) 14,199 (411) 4,162 9,165 (557) 36,341 (6) (768) (774) 8,815 14,345 4,162 8,642 35,964 Amortisation and impairment losses at 1 January Amortisation (3,693) (12,840) (110) (237) Impairment losses for the year Assets disposed of or fully amortised 146 (6,901) (829) (14) 411 (23,544) (1,066) (14) 557 6 (3,693) (12,515) (331) (110) (6,821) (23,139) (836) (1,167) (12) 768 (12) 774 Amortisation and impairment losses at 31 De- cember (3,693) (12,931) (110) (7,333) (24,067) (3,693) (12,840) (110) (6,901) (23,544) Carrying amount at 31 December 5,122 1,268 4,052 1,832 12,274 5,122 1,505 4,052 1,741 12,420 Nuuday Annual Report 2022 90#91nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 3.2 | Property, plant and equipment Cost at 1 January Additions Assets disposed of Cost at 31 December 2022 2021 Network infra- structure Assets under Equipment construction Total Network infra- structure Assets under Equipment construction Total 2,373 724 81 3,178 2,454 695 287 45 37 369 276 42 58 23 3,207 341 (538) (538) (357) (13) - (370) 2,122 769 118 3,009 2,373 724 81 3,178 Depreciation and impairment losses at 1 January (1,456) (593) (4) (2,053) (1,449) (541) Depreciation (312) (61) (373) (362) (65) (2) Impairment losses for the year 538 Assets disposed of Depreciation and impairment losses at 31 December (1,230) (654) (4) 538 (1,888) 357 (1,456) 13 (593) Carrying amount at 31 December (4) S, S, S (1,992) (427) (4) 370 (2,053) 892 115 114 1,121 917 131 77 1,125 Nuuday Annual Report 2022 91#92nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 3.3 | Lease assets and liabilities Lease assets (DKKm) Carrying amount at 1 January Additions Disposals Depreciation Carrying amount at 31 December Lease liabilities (DKKm) Recognised in the balance sheet at present value: Current Non-current Total Maturing within 1 year Maturing between 1 and 3 years Maturing between 3 and 5 years Maturing after 5 years Total The total cash outflow for leases in 2022 was DKK 84m (2021: DKK 90m), of which, DKK 10m (2021: DKK 11m) related to inter- est payments on lease liabilities. Land and buildings 339 12 (59) 292 2022 Vehicles and equipment Total Land and buildings 2021 Vehicles and equipment Total (24) དྷསྨཱ ཙེ 8 34 373 372 38 410 38 39 21 60 (4) (11) (1) (12) (83) (61) (24) (85) 324 339 34 373 2022 2021 Amounts recognised in the statement of profit and loss (DKKm) Expense relating to short term leases 81 81 Depreciation charge of lease assets, cf. above Interest expense (included in financing cost) 272 314 353 395 81 81 139 136 63 88 70 90 353 395 2022 2021 (29) (24) (83) (85) (10) (11) Nuuday Annual Report 2022 92#93nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 3.4 | Investments in subsidiaries (DKKm) Cost at 1 January Additions Cost at 31 December Value adjustments at 1 January Share of profit/(loss) Value adjustments at 31 December Carrying amount at 31 December Overview of subsidiaries at 31 December 2022 Company name Subsidiaries: Domicile Hiper A/S Copenhagen, Denmark TDC Telco ApS Taastrup, Denmark 2022 2021 752 732 20 752 752 (74) (53) (33) (21) (107) (74) 645 678 Currency Ownership share (%) DKK 100 DKK 100 Nuuday Annual Report 2022 93#94nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 3.5 | Trade receivables (DKKm) Trade receivables Expected credit losses Trade receivables, net Expected credit losses at 1 January Expected credit losses recognised Realised credit losses Reversed expected credit losses Expected credit losses at 31 December 3.6 Contract assets and liabilities 2022 2021 (DKKm) 2022 2021 1,218 1,207 (89) (163) 1,129 1,044 Assets recognised from costs to obtain a contract (SAC) Assets recognised from costs to fulfil a contract Assets recognised from costs to fulfil an internal contract Total contract assets 226 197 41 18 349 314 616 529 (163) (179) (50) (34) Deferred subscription income 2,168 2,133 99 33 25 17 Work in progress for the account of third parties, liabilities Total contract liabilities 5 17 2,173 2,150 (89) (163) Trade receivables (DKKm) Not yet due Less than 1 month past due More than More than More than 1 month past due 3 months past due 6 months past due Total 2022 Expected loss rate Gross carrying amount Expected credit losses 2% 1% 2% 18% 76% 895 151 61 22 89 (15) (1) (1) (4) (68) 7% 1,218 (89) 2021 Expected loss rate Gross carrying amount | 1% 1% 4% 11% 75% 14% 778 144 50 37 198 1,207 Expected credit losses (7) (2) (2) (3) (149) (163) Nuuday Annual Report 2022 94#95nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 4.1 | Equity 5.1 | Change in working capital For information on share capital, see note 4.1 to the consolidated financial statements. (DKKm) Change in inventories 4.2 | Loans For a specification of loans and a reconciliation between loans and cash flows from financing activities, see note 4.2 to the consolidated financial statements. Change in receivables Change in contract assets Change in trade payables Change in contract liabilities Change in prepaid expenses Change in other items, net Total 4.3 | Financial income and expenses (DKKm) Interest income from group companies 2022 2021 Other interest income Interest expenses to group companies 13 5 (360) (391) Other Interest expenses Net interest (54) (54) (401) (440) Currency translation adjustments (1) (6) Fair value adjustments 85 Interest and currency translation adjustments (317) (446) Profit/(loss) from joint ventures and associates 49 Total (317) (397) 2022 2021 (35) (55) (142) 166 (87) (69) (181) 743 22 (29) 6 (54) (23) (81) (440) 621 Nuuday Annual Report 2022 95#96nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements 6.1 Related parties 6.2 Fees to auditors elected by the Annual General Meeting 2021 2 5 1 6 1 9 3 For information about the related parties of the Group, see note 6.2 to the consoli- dated financial statements. The parent company has the following transactions and balances with its subsidiaries (cf. the overview of subsidiaries in note 3.4): Subsidiaries (DKKm) 2022 2021 Income Expenses 14 9 (113) (108) Receivables 75 17 Debt (219) (7) Remuneration for the Board of Directors and the Executive Committee is described in note 2.4 and incentive programmes are described in note 6.1 to the consolidated financial statements. All transactions with related parties are made on market terms. Nuuday A/S is included in the consoli- dated financial statements of TDC Holding A/S and of the ultimate parent company DKT Holdings ApS. The consoli- dated financial statements can be down- loaded from tdcgroup.com/en/investor- relations. Fees to auditors elected by the Annual General Meeting (DKKm) 2022 Statutory audit 3 Other assurance engagements Tax advisory services Other services Total non-statutory audit services Total 6.3 Other financial commitments 1 - For information on other financial commitments, see note 6.4 to the consolidated financial statements. Nuuday Annual Report 2022 96#97nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements ........... 6.4 Pledges and contingencies 6.5 Events after the balance sheet date Cash with a carrying amount of DKK 402m are pledged as security for long-term loans. For information on pending lawsuits, see note 6.5 to the consolidated financial statements. For information on events after the bal- ance sheet date, see note 6.6 to the consolidated financial statements. Nuuday Annual Report 2022 97#98nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Statements Nuuday Annual Report 2022 98#99nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Management statement Today, the Board of Directors and the Executive Committee considered and approved the annual report of Nuuday A/S for 2022. The annual report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and further requirements in the Danish Financial Statements Act. In our opinion, the consolidated financial statements and parent company finan- cial statements give a true and fair view of the financial position at 31 December 2022 of the Group and the parent com- pany and of the results of the Group and parent company operations and cash flows for 2022. In our opinion, the management's review includes a true and fair account of the developments in the operations and financial circumstances of the Group and the parent company, of the results for the year and of the financial position of the Group and the parent company as well as a description of the most significant risks and elements of uncer- tainty facing the Group and the parent company. We recommend that the annual report be adopted at the Annual General Meeting. Copenhagen, 31 March 2023 Executive Committee Jonathan Glyn James Chief Executive Officer Board of Directors Henrik Christiansen Chief Financial Officer Michael Parton Chair Anna Sofia Arhall Bergendorff Vice chair Søren Abildgaard Jacobsen Peter Nyegaard Zanne Merethe Stensballe Susana Leith-Smith Joe Boorman Thomas Lech Pedersen Tobias Tolstrup Nuuday Annual Report 2022 99#100nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Independent auditor's report To the shareholder of Nuuday A/S Opinion We have audited the consolidated finan- cial statements and the parent financial statements of Nuuday A/S for the finan- cial year 01.01.2022 - 31.12.2022, which comprise the income statement, state- ment of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including a summary of significant accounting poli- cies, for the Group as well as the Parent. The consolidated financial statements and the parent financial statements are prepared in accordance with Interna- tional Financial Reporting Standards as adopted by the EU and additional re- quirements of the Danish Financial Statements Act. In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group's and the Parent's financial position at 31.12.2022, and of the results of their operations and cash flows for the financial year 01.01.2022 - 31.12.2022 in accordance with International Finan- cial Reporting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAS) and the additional requirements applicable in Denmark. Our responsibili- ties under those standards and require- ments are further described in the "Au- ditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements" section of this auditor's report. We are inde- pendent of the Group in accordance with the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Account- ants (IESBA Code) and the additional ethical requirements applicable in Den- mark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evi- dence we have obtained is sufficient and appropriate to provide a basis for our opinion. Statement on management commentary Management is responsible for Manage- ment commentary. Our opinion on the consolidated financial statements and the parent financial statements does not cover the manage- ment commentary, and we do not ex- press any form of assurance conclusion thereon. In connection with our audit of the con- solidated financial statements and the parent financial statements, our respon- sibility is to read the management com- mentary and, in doing so, consider whether the management commentary is materially inconsistent with the consol- idated financial statements and the par- ent financial statements or our knowledge obtained in the audit or oth- erwise appears to be materially mis- stated. Moreover, it is our responsibility to con- sider whether management commentary provides the information required under the Danish Financial Statements Act. Based on the work we have performed, we conclude that the management com- mentary is in accordance with the con- solidated financial statements and the parent financial statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstatement of the manage- ment commentary. Management's responsibilities for the financial statements and the parent financial statements Management is responsible for the prep- aration of consolidated financial state- ments and parent financial statements that give a true and fair view in accord- ance with International Financial Report- ing Standards as adopted by the EU and additional requirements of the Danish Fi- nancial Statements Act, and for such in- ternal control as Management deter- mines is necessary to enable the prepa- ration of consolidated financial state- ments and parent financial statements that are free from material misstate- ment, whether due to fraud or error. In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group's and the Par- ent's ability to continue as a going con- cern, for disclosing, as applicable, mat- ters related to going concern, and for using the going concern basis of ac- counting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic alternative but to do so. Nuuday Annual Report 2022 100#101nuuday Management review Financial statements Section 1 Section 2 Section 3 Section 4 Section 5 Section 6 Parent company Statements Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements Our objectives are to obtain reasonable assurance about whether the consoli- dated financial statements and the par- ent financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAS and the additional requirements applicable in Denmark will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggre- gate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consol- idated financial statements and these parent financial statements. As part of an audit conducted in accord- ance with ISAS and the additional requirements applicable in Denmark, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of mate- rial misstatement of the consolidated financial statements and the parent financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement re- sulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent's internal control. • Evaluate the appropriateness of accounting policies used and the rea- sonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management's use of the going con- cern basis of accounting in preparing the consolidated financial statements and the parent financial statements, and, based on the audit evidence ob- tained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent's ability to continue as a going concern. If we con- clude that a material uncertainty ex- ists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements and the parent financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evi- dence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group and the Entity to cease to con- tinue as a going concern • Evaluate the overall presentation, structure and content of the consoli- dated financial statements and the parent financial statements, including the disclosures in the notes, and whether the consolidated financial statements and the parent financial statements represent the underlying transactions and events in a manner that gives a true and fair view. Copenhagen, 31 March 2023 Deloitte Statsautoriseret Revisionspartnerselskab CVR No 33963556 Lars Siggaard Hansen State Authorised Public Accountant Identification No (MNE) mne32208 • Obtain sufficient appropriate audit evi- dence regarding the financial infor- mation of the entities or business ac- tivities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and perfor- mance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, in- cluding any significant deficiencies in in- ternal control that we identify during our audit. Christian Sanderhage State Authorised Public Accountant Identification No (MNE) mne23347 Nuuday Annual Report 2022 101#102nuuday Forward-looking statements Forward-looking statements This report may include statements about Nuuday's expectations, beliefs, plans, objectives, assumptions or future events or performance that are not historical facts and may be forward-looking. These statements are often, but not always, formulated using words or phrases such as "are likely to result", "are expected to", "will continue", "believe", "is anticipated", "estimated", "intends", "expects", "plans", "seeks", "projection" and "outlook" or similar expressions or negatives thereof. These statements involve known and unknown risks, estimates, assumptions and uncertainties that could cause actual results, performance or achievements or industry results to differ materially from those expressed or implied by such forward-looking statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this financial report. Key factors that may have a direct bearing on Nuuday's results include: the competitive environment and the industry in which Nuuday operates; contractual obligations in Nuuday's financing arrangements; developments in competition within the domestic and interna- tional communications industry; information technology and operational risks, including Nuuday's responses to change and new technologies; introduction of and demand for new services and products; developments in demand, product mix and prices in the mobile and multimedia services market; research regarding the impact of mobile phones on health; changes in applicable legislation, including but not limited to tax and telecommunications legislation and anti-terror measures; decisions made by the Danish Business Authority; the possibility of being awarded licences; increased interest rates; the status of important intellectual property rights; exchange-rate fluctuations; global and local economic conditions; investments in and divestment of domestic and foreign companies; and supplier relationships. As the risk factors referred to in this report could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made in this Report, undue reliance is not to be placed on any of these forward-looking statements. New factors will emerge in the future that Nuuday cannot predict. In addition, Nuuday cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those described in any forward-looking statements.